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Agency law defines several duties agents owe their

dOuty of loyalty
dOuty not to be negligent
dOuty to obey instructions
dOuty to not to serve two principals having adverse
interest
 dOuty to inform the principal of all the
relevant information
dOuty to keep a record of all the money
and assets
dOuty of reasonable care

dA principal has the duty of paying for the agents¶ services and
honoring all other agreed-on commitments to the agents.
 
 

must provide information to
clients and see that their coverage is complete and accurately
reflects the value of the covered property or potential liability. After a
loss, an agent must provide information and counsel.

 

must provide clients with continuous service.
He also should provide his clients with a regular view of their
insurance needs and compare the amounts of insurance they own
with these needs.

 Oifference between Insurance agent and insurance broker:


 

‡Insurance agent is an agent ‡Insurance broker is an
of the insurer. agent of insured.
‡He is authorized to bind his ‡He isn¶t authorized to
principal to enter into a bind his principal to
contract etc. enter in contract.
‡Agent¶s principal is Insurer ‡Broker¶s principal is
or insurance company. Insured or the
applicant.
 Both agents have different grant of authority because
property insurance contract can be cancelled at any time by giving
a due notice, but the life insurance contract cannot be cancelled
except in case of non-payment of insurance premium.
 ahe really important factors in choosing an insurance agent
are the services offered before and after a loss, the coverage
provided, and the price of the insurance which an agent is offering
on the behalf of his principal. Furthermore, the consumers should
be more concerned with understanding and trusting the insurance
agent rather than with the agent being an independent agent or
representing a direct writer.
A !
 is the intentional abandonment of a known right.
While an

 is a court action preventing a person from
asserting his or her rights because the court found the person¶s
conduct inconsistent with asserting the right. When either of these
doctrines is applied in a particular case, an insurer may find it must
pay claims it otherwise might not have to pay.
 In a complicated case or situation when it¶s not clear whether
insured¶s claim is clear and fair or not, and adequate information is
not available to make correct decision, insurer neither makes
payment nor deny the claim, rather, he decides to take the third
route, he must give the insured adequate notice of the situation and
carefully meet other legal liabilities. ahis notice is called
"#

!#$letter.
A good loss adjustment occurs when the insured receives full
amount of benefits permitted by the contract. ahus, if the adjuster
feels that the insured suffered a larger loss than claimed, the adjuster
should recommend a larger settlement than the insured requested.
So, a good job of loss adjusting involve the claims adjuster
negotiating the fair dollar amount of claims settlement, not lowest.
 Insurers can settle their claims fairly through loss adjusters
and not reduce the payments for legitimate losses. ahus, they settle
most valid claims without arbitration or suits. If the loss adjuster and
insured agree on the same amount of the claim, the adjuster
recommend insurer to make payment, but if the adjuster feels that
the claim has no validity, he will recommend the insurance
company to deny the claim. ahus, insurers settle their claims fairly
"% & 
$
 Insurance companies prefer to hire independent loss
adjustment bureaus because its easier to hire an independent
adjuster to proceed or negotiate when the loss occurs, rather than
to have an adjuster as an employee, because that employee may
not be available at the location of the loss occurred immediately
specially in automobile insurance case. So, they hire an adjuster
from the nearest independent adjustment bureau to complete the
investigation.
 An insurance underwriter must be concerned with the
adverse selection because the underwriter who does not select
applicants carefully will soon find the actual loss experience well
above the expected experience based on predictions of insuring an
average group.
redit bureaus require an agent to notify an
applicant before an investigation is made. ahe applicant
is allowed to examine any relevant records the insurer,
as well as correct or amend information or have the
facts reinvestigated.