Due Care

Definition - What does Due Care mean?

Due care is the act of informing the client of the features of an insurance policy, especially the risks that may happen in the future involving the possible purchase.

Insuranceopedia explains Due Care

Truthfulness or disclosure is required by law when a company or an agent is selling a policy. Both must not misrepresent a product (e.g. claiming a feature that isn't actually in a policy) or hide or fail to mention a feature in the policy which might potentially discourage a client from purchasing one. That is due care.

Once a company or an agent is unable to perform due care, the client may sue for negligence that might result into the closure of the company or make it pay a large amount for damages and the termination of license due to malpractice of the agent.

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