Policy Change Requests Can Only Be Made if Requesting Party Has Authority/Insurable Interest. Many years ago when I first entered the industry, I remember an experienced underwriter telling the story of an angry ex-wife cancelling the insurance on her ex-husband’s car. As providence or a witch doctor would have it, he then had an accident only to learn he had no insurance. Told well, this can be a humorous story.
To the agency who cancelled coverage, it is possibly an E&O nightmare. They took an order to change coverage from a person who had no authority to change coverage. Sometimes the party calling does not mean harm, sometimes they do. Nonetheless, agencies should never take an order to change coverage without verifying the party has the authority to do so.
Maybe the most common example of this today is when agencies write binders and even insurance policies because that is what the mortgage company or bank demanded. When does a mortgage company or bank have the authority to dictate how a policy is written without confirming it with the insured?
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