"This question was asked at an E&O seminar. We had a licensed agent contact our Department of Commerce in regards to a prospect that doesn't speak English, who would be responsible to hire an interpreter so they could understand the policy? They where told that it would be the responsibility of the agent to hire the interpreter. I would appreciate some comments. Do you see an E&O exposure?"

"We have an increasing number of potential clients that do not speak or read English. They usually are accompanied by another person, most often younger adults or children, to act as an interpreter. None of the employees of the agency speak or read Spanish (or any other language except English) and all of our forms are in English (we have no plans to stock forms we can't read).
 
"What ramifications will we encounter if we decline to quote/write any person who cannot read and speak English? I see a potential lawsuit/E&O claim when it comes to non-English clients...we require the insured to sign an application and other forms (e.g., UM selection) - if they cannot read English, they have just signed a document/contract they cannot read and have no idea what it contains. I can just hear the plaintiff’s attorney asking questions with the agent on the stand: 'If the insured couldn't read English, why did you have them sign the form - is that a normal business practice to have insureds sign forms they don’t understand?' 'How do you expect the insured to have understood what options/coverages/limits were available?', etc.
 
"I see the company pointing the finger at the agent saying we should have known better and the agent being the sole defendant. There is no guarantee the interpreter interpreted either/both sides of the conversation correctly and the interpreter doesn't sign anything and is not a party to the contract. They may or may not be available when it comes time to go to court and, even if they are, they are usually a relative of the insured, and I would question their ability to remember what happened 'back when' the application was done, especially if there is a claim pending against the company and/or agent.
 
"It is hard enough proving in court the insured knew/understood what they were signing with English speaking clients. I can just imagine what non-English clients (and their attorneys) could do!"

In the past few months, our "Ask an Expert" service has received four such inquiries. Below are some observations from the VU faculty.  Keep in mind that these comments do not constitute legal advice of any kind. Our intent is to address E&O and procedural issues. Obviously, this situation involves potentially serious legal issues that we are not qualified to address.

According to the National Association of Realtors, housing markets will become more diverse with minorities, over the next 10 years, accounting for an estimated two-thirds of new households. "They will account for more than 50 percent of first-time homebuyers by 2010, when nearly three in 10 households will be headed by a minority."

Harvard University also weighs in with these more extreme projections for home ownership by 2010: Caucasion, 36 percent; Hispanic, 31 percent; African-American, 20  percent; Asian, other, 13 percent. Many of these citizens will not speak English as a first language. Needless to say, this issue is rapidly becoming increasingly important from both a marketing and E&O standpoint.

My inclination is to avoid dealing with a client that you can't communicate with unless there is some legal requirement to do so. I have no idea what the DOI is talking about here. Why must the agency incur this expense? On personal lines accounts, the commission would be eaten up by the cost of an interpreter and translation expenses. If possible, I'd refer them to an agency or company with personnel who can communicate with them in their own language. Otherwise, I'm not sure how you can effect an enforceable contract without a clear and sure meeting of the minds. Perhaps you can establish a reciprocal relationship with a bilingual agency where you refer business to them and they do the same with regard to accounts they may not be qualified to handle.

I don't know what the DOI could have based their position on. One suggested guideline might be not to try and handle an account unless the insured brings their own interpreter. In an E&O seminar last week, an agent was lamenting having to explain "fire" to a Chinese client...they used hand signs and sounds. There is no way that the agent can satisfactorily explain something like "uninsured motorists" coverage this way. Better to not even try, and put the burden on the insured to bring someone who can translate. If this were involving a CPA, doctor, etc., it seems that they would also decline to get involved until they could effectively communicate with the client/patient. 

I have a problem with this conceptually. How can any business be required to spend money to hire an interpreter to provide a voluntary business relationship to someone who does not speak English? What if the cost of the interpreter is more or close to all of the commission earned?
 
The state in question is not a "take-all-comers" state. As such, I believe the agent may be able to decline to do business with this client on the basis of inablility to communicate and provide service. I don't know whether the state has any service fee regulations, but this may be a case where the agency could pass the charge to the insured. I personally would feel the E&O exposure is too great when you can't communicate with the client.

Does the company have the policy in the language of the customer? I assume they are talking about Spanish. I don't think this situation falls under the ADA, so I'd say the customer needs to get their own interpreter.

As an E&O instructor, I understand and agree with your concerns. I would suggest that you provide them with the name of an agent/agency that has staff that can speak the language. Having a child or other non-insurance person translating insurance discussions, where you have no idea what they saying or explaining to the other party, is a dream come true for a plaintiff's attorney.

Have the interpreter sign a form saying they translated everything you said and every question on the application as well as the answers. Be sure to verify the ID of the translator. Otherwise you will need a court appointed translator and a court reporter at every meeting with non-English speakers. Easier, refer the insured to a broker or agent that speaks their language and take a referral fee. You are correct, they will blame you if something goes wrong and your E&O exposure will increase.

All the points made are fair, but it begs the question why more agencies aren't hiring bilingual staff, doesn't it? It's an issue that agencies in the Rio Grande Valley dealt with long ago. Someone, preferably more, needs to speak Spanish. In Houston, it's Spanish and Vietnamese. Agencies who have those staff are at the front of the line when dealing with those customers. 
 
Be accused of being unfairly discriminatory I don't think is likely when you can't speak the language. I doubt there is any law in their state that says you "have to" write anyone's insurance, though that isn't the case in other states.

Funny you should mention this. I am currently acting as an expert witness in a case where the people did not fully understand English. Unless you have a qualified licensed employee who speaks their language very well, I would rather avoid writing the insurance. If you have an opportunity with a group of these folks, maybe you can hire someone who speaks the language.

In one case, a Japanese couple bought a car at a dealership and bought insurance. They thought it was "full coverage" but it was only physical damage (stated in big letters on the binder). They called the insurance agent and told him to cover it as of the 7-day expiration date of the dealership binder. 

The agency had Japanese speaking people help them and faxed them a personal insurance explanation in Japanese. The couple told the agency to bind coverage when the dealership binder expired. The loss was a few days before the binder expired and a few days before the new policy started. The couple is back in Japan and gave their rights to sue under E&O to the injured parties in the other car (to get out of the litigation). 

The allegation is that the insurance agency should have investigated what prior insurance was actually there before taking the word of the prospect. Of course, the Japanese couple never told anyone that they did not fully understand or that they needed help. Because they could somewhat speak English, they acted as if they understood everything. 

Almost all of the E&O cases seem to settle out of court. I hope this doesn’t. I don’t see any agent as having to doubt information given them by prospects or requiring copies of prior coverage before quoting.

They need to ask an attorney, though I doubt anyone can decline to quote someone just because they can't speak English (in some states). More of my clients are hiring at least one bi-lingual CSR. They sometimes have to pay extra, but they find it is worth it.

I suppose there are several ways to look at this problem.

First, if the customer shows up without an interpreter, I do not believe that the agency would be required to obtain one at its cost. The customer would just have to go elsewhere or provide the interpreter. If the customer has an interpreter with him, how can the agent be sure that the correct info is being given to the customer? 

Second, if the customer is turned away because the agent cannot understand the language of the customer, is the agent running a risk of some sort of discrimination claim? I’m sure that there are some activist attorneys out there who could find some “civil rights“ claim lurking in such a situation, especially where State action is involved (e.g., mandatory auto coverage). Without doing some serious research on such a civil rights or discrimination issue, I would be reluctant to give the agent a firm answer on this. 

Finally, perhaps this could be seen as a “marketing opportunity” for the agent willing to hire employees who could speak foreign languages to act as interpreters in these situations. I know I am not giving you any real answers, but I do think that some agency policy or procedures will have to be developed to deal with this. Maybe the agency could tell the customer that it would have to hire an interpreter and charge the customer the interpreter’s fee if he wanted to go forward with applying for coverage at that agency. At least the agent could have some assurance that the interpreters communication with the customer would be neutral.

This is a serious and growing exposure. In Duong v. Salas, La. Ct. App. (2004), the court found that the agency was responsible for UM benefits for an Asian customer who allegedly refused UM coverage. He had even brought his own interpreter to the agency when purchasing auto insurance, but both later denied understanding what they had read and signed. In my opinion, if you don't have someone fluent in a customer's language, send them to an agency that does.

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