Life & Health Insurance Practice Exam 2025 - Free Practice Questions and Study Guide

An insurance agent should be especially cautious of liability for errors and omissions when advising a client to switch existing coverage. This scenario is critical because changing an insurance policy can have significant implications for the client’s coverage and financial security. The agent must ensure that the new policy meets the client's needs and provides adequate protection compared to their current policy. If the agent fails to fully understand the existing coverage or misrepresents the new policy's features, benefits, or costs, the client could suffer a loss, leading to potential liability for the agent.

This situation requires a thorough assessment of the client’s current coverage, explaining the advantages and disadvantages of switching, and ensuring the client understands the implications. Because these recommendations carry weight and responsibility, the potential for errors or omissions is higher, making this a situation where an agent must proceed with extra care.