If you've fallen behind on the premium payments for your car insurance policy, you're going to start getting nonpayment alerts and notices of impending cancellation from your insurance company. But there's one person you probably won't hear from on the matter: your insurance agent. That's because agents aren't required to notify a policyholder in the event of an impending cancellation. "The parties to the insurance [policy] are the carrier and the policyholder," explains insurance agent David Hulcher, an assistant vice president of Agency E&O Risk Management at Big I Advantage in Alexandria, Va. "State regulations require carriers [to have] specific time frames and methods to notify policyholders of cancellation. The agents are not a necessary party to this direct communication." In other words, letting you know that you forgot to pay the bill is the responsibility of the insurance company, not the agent. Your agent will probably receive a copy of the notice, and there's nothing to preclude him or her from also giving you a heads-up. Yet many will deliberately stay out of it, preferring to let the insurer handle the task of informing you of your delinquency. Hulcher, who is in the business of protecting the practices of insurance agents, says that this decision is partly a matter of limiting the agent's professional liability. "The concern is really about taking on an additional duty that is going to potentially raise the standard of care for customers, which in turn increases exposure," he says. If agents get in the habit of calling up their less-conscientious clients every time they forget to send in their monthly payment, they run the risk of establishing that as the norm. And that means that if the month comes when the agent forgets to call with their usual reminder and the client loses his or her coverage, that agent could be sued if the client later gets into an accident and isn't covered.
But it's not just litigation that makes agents wary of calling up delinquent clients. It's also the fact that they don't have time to deal with it.