Accent Déonto receives many questions from professionals seeking to act in accordance with their ethical obligations. Situations can sometimes get complicated. Here are a few real-life cases that focus on the same breach: failing to speak to all the insureds named on the contract.

A woman who owns a home with her spouse calls an agent to purchase home insurance. After completing the needs analysis, the agent issues a contract in the names of both owners.

A couple separates. The wife keeps the house. She asks the broker to remove her ex-spouse’s name from the home insurance contract even though he is still a co-owner.

Whether you are quoting for a new contract, making changes during the term of the contract, adding or withdrawing coverage at renewal time, or removing an insured, terminating the contract, or making a claim, the ChAD is there to remind you of your obligations when several insureds are named on the contract.   

Who is named on the contract?

Unless a power of attorney or a note in the file specifies that the person you have contacted is mandated to manage the insured’s file, make sure to speak to the insured or, if there are several insureds, to all those named on the contract.

Even if it is a mother shopping around for her child’s car insurance or a grandson helping his grandmother with her home insurance, you must always avoid third-party interference in your client’s file.^[1]   This means that you must gather the necessary information from the named insureds in order to identify their needs and offer them the product that meets their needs ^[2]. You must then describe the proposed product and the nature of the coverage before they enter into a contract^[3] .

Moreover, be careful if you are contacted by an occasional driver mentioned in the contract or a person living in the same household: although they are identified and covered by the contract, only insureds named on the declarations page may request changes or give instructions.

Removing a Co-insured from the Contract

An insured calls his broker to request that the coverage of a second home be removed from his home insurance contract since this home now belongs to his former spouse. The man provides a notarized document proving that he gave up the house and explains that his ex-wife has purchased her own insurance policy for this house. 

The broker must obtain consent from the ex-wife named on the contract, failing which he cannot remove the coverage.  This action could cause considerable harm to the insured ex-spouse if she has not yet purchased her own insurance for the house. However, if the broker receives confirmation that she has the required coverage for the house, he may proceed with his client’s request.  

A five-partner dental clinic holds a commercial-lines insurance contract. One of the dentists is mandated to take care of the clinic’s insurance. This partner would like to remove one of the dentists from the insurance contract.   

Even though one person has been designated to manage the insurance contract, when it comes to removing a co-insured, the agent or broker must obtain the consent of the co-insured in question before removing him from the contract.

An insured who owns a tanning salon decides to suspend her business and put her eight tanning beds into storage. When she contacts her broker to adjust the coverage in her contract, she realizes that one of the tanning beds listed in the contract belongs to a partner who has left the business. She asks to have this person removed from the contract ^[9] .

Since the bed is listed under the name of another insured named on the contract, the broker must notify this person before removing the insurance coverage on their property ^[10] .

What should you do if you cannot find a co-insured named on the contract?

You must do the necessary research to find the client, such as checking with contacts in the file (financial institution, creditor, spouse, employer, references) or conducting an Internet search. If you have the co-insured’s contact information but they do not respond to your attempts to reach them, send them a written message with an acknowledgement of receipt in which you explain the reasons for the steps you have taken and the importance of contacting you.

If you fail to obtain the insured’s approval before making changes to the contract, ensure your decision limits any potential harm to him. For example, if a recently divorced man wants to remove his former spouse’s car from his automobile insurance contract, you must obtain the ex-spouse’s consent before ending her coverage since she is a co-insured. Even if you are unable to reach a named insured, never cancel a contract without taking reasonable steps to mitigate any potential harm and avoid leaving the insured without coverage.

In sum, you must demonstrate that you have taken reasonable precautions and been diligent in avoiding potential harm to the co-insureds; this includes making a serious effort to find the person in question and insisting on obtaining their consent or the required information.

Do not forget to make a note in the client-file of all the steps you took and the results of your research to show that you have taken all the necessary steps and actions.

^{[1] Section 37(3) of the Code of ethics of damage insurance representatives.} 

^{[2] Section 27 of the Act respecting the distribution of financial products and services.}

^{[3] Section 28 of the Act respecting the distribution of financial products and services.}

^{[4] Chambre de l’assurance de dommages v. Filion, 2020-08-14(B).} 

^{[5] Section 37(3) of the Code of ethics of damage insurance representatives.}

^{[6] Chambre de l’assurance de dommages v. Michaud, 2019-04-03(B).}

^{[7] Section 37(6) of the Code of ethics of damage insurance representatives.}

^{[8] Section 28 of the Act respecting the distribution of financial products and services.}

^{[9] Read Listen Carefully, Advise Properly – Chambre de l’assurance de dommages (chad.ca)}

^{[10] Section 37(4) of the Code of ethics of damage insurance representatives.}