Are you a property-casualty agent? Are you an attorney? If, like most of us, you answered “yes” to the former question and “no” to the latter, why would you want to enlarge your E&O exposure beyond its already formidable size by acting like an attorney? I don't know either, but read a plaintive cry for assistance I recently received that shows how easy it is for well-meaning folks to do just that.

“My partner and I really enjoyed your E&O seminar. You made the day a great experience for both of us, and we really learned a lot. There was one area not covered during the seminar I wanted to ask you about. Our agency insures many contractors. The contracts our customers are being asked to sign these days are unbelievable. The indemnification wording and breach of contract provisions are incredible. Sometimes our insureds send us copies of contracts to review and sometimes they don't. I have a few questions to run by you…

“Should we be asking all our customers to send us contracts to review? If the answer is yes, we might need to hire a person who just reviews contracts!
“Should we tell them to have their attorneys review contracts before signing them? If 'yes,' most won't.
“We try to review the contracts and provide a written response to the insureds, telling them areas of concern. Is this appropriate?
“Any other thoughts you have would certainly be welcome.”
OK, so “plaintive cry” might be an exaggeration–especially since this person took the intelligent approach of heavily schmoozing the recipient before asking his questions. As the “schmoozee,” I am now honor-bound to respond.
Gentle Writer: “No,” “yes,” and “no.”
So much for honor. Now let's cut to those “other thoughts.”
You say: “The contracts our customers are being asked to sign these days are unbelievable. The indemnification wording and breach of contract provisions are incredible.” And you want to review these? Can we talk?
In my travels, I've encountered many agents who insist it's not only their duty but also an honor to review contracts for their insureds. While I'm not, in principle, opposed to this praise-worthy endeavor, let me clearly state the problem: With few exceptions, insurance agents are not attorneys.
If we are to take on contract review as another E&O exposure for which we are largely uncompensated, the least we could do is attend the requisite law courses to be competent at the practice. Without doing so, we run the risk of misreading or misinterpreting key clauses of what are often detailed documents, to the detriment of both our clients and ourselves. Do we really want to go there?
For example, contracts are drawn up by attorneys for attorneys and typically include vast amounts of what is commonly known as “legalese.” Without an experienced translator, how can we be sure our “plain language” explanation is correct?
Let's take the writer's questions one at a time, considering their potential ramifications and possible solutions.
Should we be asking all our customers to send us contracts to review? If the answer is yes, we might need to hire a person who just reviews contracts!
Leaving aside the question of its advisability, responding to a client's request to review a contract is one thing-but it's entirely another matter to invite all your customers to “bring it on!” That makes it appear that contract review is a service you're more than willing to provide–and it implies you can perform it with expertise. Indeed, if you opt for this “all in” approach, I believe my friend is exactly right: You will need to hire a person who just reviews contracts. And that person should be an attorney.
On the other hand, if your customer initiates the request, you have two options. First, you can refuse. This refusal should be accompanied by an explanation along the following lines: “Bob, I'm not an attorney, so I'd hate to overlook a key provision that may be couched in pure legalese. But I'm more than willing to talk with your attorney about the insurance implications, once he or she reviews your contract and knows the obligations it places on you.” This is my favored response. It preserves your value as an insurance counselor without extending your professional liability into the realm of legal opinion.
An alternative approach may be to accept the request in the following manner: “Bob, I'm not an attorney, so I'd hate to overlook a key provision that may be couched in pure legalese. But I'm more than willing to talk with your attorney about the insurance implications, once he or she reviews your contract and knows the obligations it places on you.”
If you think this sounds amazingly similar to the first approach, you're right! It is! The bottom line is that you should never go into that interpretive jungle alone. If your client wants a legal opinion, there's exactly one place to get one–from his or her attorney.
Note these approaches also answer my friend's second query, if not his cynicism.
Should we tell them to have their attorneys review contracts before signing them? If 'yes,' most won't.
I agree that most clients won't, but tell them anyway. Too often contractors sign contracts under the duress of needing the work. Asking many contractors to delay until a lawyer reviews the contract is tantamount to telling them to give up the job. So they're going to sign, then hope they haven't bitten off more than they can chew. It would be easy for me to say, “Then that's their problem, not yours.” But for those agents like my friend–looking to provide valuable and trusted service–that's not an acceptable response. That's why I suggest getting clients' attorneys involved as soon as possible–if not before signing, at least as soon after as possible, so your clients will be certain about what they've agreed to. It's your choice whether to leave that to heavy encouragement or to offer to initiate the proceedings, but getting that contract into the hands of your client's attorney (and out of yours) is key.
Now for the last question.
We try to review the contracts and provide a written response to the insureds, telling them areas of concern. Is this appropriate?
You can see why my answer is a short and sweet “no.” You're agreeing to undertake what may be viewed as a professional legal review of the contract–and then putting it in writing, no less! There are just too many potential pitfalls for me to condone this practice. If you undertake such reviews, any written response indicating “areas of concern” should be addressed not to your clients but to their attorneys. Then let the attorneys, with or without your participation, discuss the legal issues and possible solutions with your clients.
Some agents feel this approach marginalizes their value to their clients. Quite the contrary. Accountants don't marginalize their value when they refer a client to an attorney to draft the trust documents required to enact estate and inheritance tax arrangements. Rather, they have reaffirmed the unique value of their expertise. When I sold life insurance, I didn't feel it impugned my expertise to suggest my clients consult an attorney to draft proper wills. My clients appreciated my willingness to make recommendations to other professionals. To them, it confirmed that my interest in their security and family went beyond merely making another sale.
Your ultimate goal is to become one of your clients' trusted advisers. When working with their other advisers–their accountants, attorneys, etc.–staying within your expertise is precisely what makes you a key asset. How much better that is than getting in over your head by trying to do it all.
So I ask again: Are you a property-casualty agent? Are you an attorney? Unless you can answer both questions with an unequivocal “yes,” don't try to be too many things to too many people, or you just may end up being worth nothing to anyone. There's a reason for the old expression, “Jack of all trades and master of none.”
Chris Amrhein is an insurance educator and speaker with more than 30 years in the industry. He is also chief fun officer of www.insuranceisfun.com, where his newest book of insurance musings, “Yes, Virginia, There Is Insurance,” is now available. Readers may contact Chris at chris@insurance isfun.com.