Agency Errors and Omissions
Miscellaneous Tips
Reviewed January 16, 2012
Notice of No Binder, Proof of Mailing
This article presents a miscellany of short insurance agency errors and omissions tips that do not easily fall under other categories.
Acknowledgement of “No Binder”
There are times when an agency will attempt to secure coverage for a client under circumstances when coverage cannot be bound. It is an wise practice to make it clear to the client that no insurance is in effect until notice that coverage is actually in force is received. The agent should also note in the file that the client has been made aware that no binder is in effect.
The following is a form that can be sent to prospective insureds as an acknowledgement that there is NOT a binder of insurance in existence. Variations of the following may be used:
ACKNOWLEDGEMENT of No Binder—It is understood and agreed that the (type of insurance) policy for which I applied today to the (name of agency), to be issued in the (name of company) will not become effective and no liability shall be incurred under the application until the policy is issued by said company. I further understand that no binder, written or oral, has been issued or will be issued by any agent of the Insurance Agency and, therefore, I will not have any insurance coverage until and unless an insurance policy is issued and delivered by the insuring company.
Below this language should be lines for the date and the signature of the applicant-insured.
Proof of Mailing Stamp
The following is an example of a Proof of Mailing rubber stamp that can be used as proof that a producer has mailed a document. It is simply stamped on the copy of the document retained, and the person creating or signing the document signs as witness on the stamp. When the original of the document is mailed, the person doing the mailing simply signs the top signature line showing that the mailing was accomplished. Just having a copy of a letter or application is not necessarily proof in a court of law. The stamp was developed as a result of a court case that was lost because the producer could not bring the persons who actually handled the mailing of the document to court.
I hereby certify that this date I personally mailed in the U.S. Post Office, postage prepaid at the local branch a letter, an exact copy of which appears above.
Where should the stamp be used? On matters involving declinations, nonrenewal letters, letters recommending increased or additional coverages, and any document that might be needed to verify a mailing to a policyholder or applicant. Use is also recommended on mail to carriers, particularly involving cases where the producer's (or agency's) binding authority for a particular risk is in question. The stamps are relatively inexpensive and can be obtained at most office supply stores.
Legal Effect
Legal counsel states that if the stamp is regularly placed on notices and signed, it would be admissible in court to show that the notices had been mailed without the necessity of calling the individual to testify who mailed the notice based on the rule of evidence known as the Business Records Exception to the Hearsay Rule. They caution that it is important that the witness sign the document only after the person who has mailed the document signs it. In addition, the attorneys point out that use of this stamp will not replace any requirement, if imposed by statute or regulation, that a particular notice be sent by certified or registered mail.