Posts Tagged ‘proper insurance planning’

It is my experience that most licensed insurance agents are usually able to answer their client’s coverage questions correctly.  Meanwhile, many problems arise simply because consumers simply do not know the right questions to ask to get the information they really need Should it be the consumer’s job to know the right questions to ask?

In reality, learning how to help their clients ask the right question is a skill that few insurance professionals ever master. As Hurricane Irene was chewing up the coast in NC this summer and heading north, our staff received numerous calls from clients asking “Am I covered for a hurricane?”. The question our clients really wanted answered:  “How will my coverage protect me for losses I may sustain from a hurricane?” Knowing this was what our clients really wanted to know, we were able to re-frame the question and provide a much more complete answer.

Of course, more complete answers can sometimes be disconcerting, especially when they are only being provided as a hurricane approaches.  Few consumers take comfort in being reminded, for example, that while a homeowner policy does provide quite a bit of coverage for damages caused by a hurricane, NO policy provides the mythical “full coverage” we’d all like to have.  The “Fine Print” of any policy explains in detail the damages that are and are not covered, and coverage varies widely among carriers.  Consider the following:

  • Unless you have specifically requested to purchase flood insurance, you will not be covered for losses that are caused by water that rises from the surface and enters your home by your homeowner policy.
  • Conversely, rain water that enters your home through a damaged roof or window is not a “flood”, and is covered by almost all homeowner policies.
  • Almost every homeowner policy in the NY Metropolitan area has two deductibles: one that applies to losses caused by a hurricane, and one that is applied to all other covered losses.  All consumers should know well in advance of a hurricane what their deductible will be for losses caused by a hurricane.
  • Because Hurricane Irene had been reduced to Tropical Storm status was when she reached NY, covered losses were adjusted using the (lower) deductible that applies to all other losses.  Next time we may not be so lucky….
  • Homeowner policies do not provide coverage to replace trees damaged by wind, hurricane force or not.  There is, however, limited coverage to remove downed trees, though policies vary widely on the circumstances under which this coverage is available, and how much coverage is provided.
  • For the many who lost power, can I suggest the purchase of (at the  least) a portable generator before next hurricane season?  Homeowner policies do provide limited coverage for food spoilage caused by a power outage, but by the time the deductible is subtracted from the claim, the cost of a portable generator would have been paid for and no spoilage would have occurred.

Two primary takeaways from all of this:

1. To make well informed decisions, insurance consumers need skillful guidance to ensure they are not only getting the right answers…. but also to the right questions.

2. It is just as important to examine the right questions BEFORE a risk arises.

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There are many examples to support my strongly held belief that proper insurance planning is not a DIY project. One recent example: when the mainstream press offers guidance on how to manage your risks, be aware that such stories often omit important pieces of information that can leave you and your family’s assets exposed to uncovered losses

In a recent article by Paul Sullivan, the highly acclaimed Wealth Matters columnist for The New York Times, readers are urged to understand and manage the many insurable risks associated with children attending college. Mr. Sullivan begins by reminding his readers that “insurable risks faced by college students have gone up tremendously in the decades since their parents lugged stereos and crates of vinyl records into dormitory rooms”.  So far, so good. 

So, you ask, just what are these new risks facing college students in the 21st Century? Surprisingly, instead of learning about any new insurable risks that have “gone up tremendously”, readers are simply reminded of the usual and obvious risks that I sure hope every parent already knows to prepare for: theft of valuable items, automobile claims, serving alcohol, trip and fall injuries, and identity theft.  While the risk of identity theft has surely risen in the past decade, readers are left to wonder what are the other risks that have actually “gone up tremendously in the decades since…stereos and…records”, as the article forewarns???  

Unfortunately, there actually are risks facing college students and their families that are on the rise, and although these risks were not revealed in this article, you can learn about them here.  Consider for a moment the liability risks (and defense costs) that can arise from your student’s improper use of e mail, blogs, social media sites like Facebook and Twitter, and webcams.  Had The New York Times consulted this risk advisor, they would have learned to warn readers of the increased risk of “personal injury” — the very broad and overlooked category of risks that all parents of teenagers should understand and secure protection for.  Not to be confused with bodily injury, “personal injury” refers to those injuries that don’t affect the body. These include false arrest, wrongful eviction or entry, invasion of the right of privacy in a room or dwelling, slander and defamation, or the violation of the person’s right to privacy.

Few consumers (or even traditional insurance agents, for that matter) ever examine whether coverage for the increasingly real risk of “personal injury” is even covered by the policies that provide their family’s personal liability protection.  Especially for families with children in high school or college, consumers should learn if the liability insurance covering the actions of their family members includes coverage for “personal injury”, as a great many personal insurance policies do not. If your policies do not provide this important protection, contact me for access to the handful of carriers that provide policies that do.  And —- please do not rely on newspaper articles for guidance on how to craft your insurance program, even those appearing in The New York Times.  

For a link to the New York Times article that omits this important information: http://www.nytimes.com/2010/09/18/your-money/home-insurance/18wealth.html?pagewanted=print

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A former colleague and a Senior VP at Ace Private Risk Services has succinctly explained the “Five Steps For Getting The Best Protection From Your Insurance Agent”  in this two page article published in a recent edition of the Institutional Investors publication Private Asset Manager.

An excerpt: “Independent agents are skilled in asking questions about your lifestyle and interests. By better understanding the risks you face, along with your tolerance for risk, they can recommend a program which provides the best value – an ideal combination of customized insurance protection and affordable price.”   The article then instructs the reader on exactly what to ask your agent for, as well as what your agent should be asking and providing you. Make no mistake, each of the steps are essential. Meanwhile…..

IF after reading this article you are able to recognize that your agent is not already performing each of the five recommended steps, find a more skillful and dedicated agent.

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The International Risk Management Institute (IRMI) is regarded by many as the premier authority in providing expert advice and practical strategies for risk management, insurance, and legal professionals.  

I was honored when Robin Olson, the principal research analyst for IRMI’s Personal Risk Management and Insurance practice contacted me and asked me to provide a peer review for an article he was preparing for a leading insurance industry trade publication, The CPCU e Journal, published by the CPCU Society.  This 18 page white paper, Personal Lines Insurance Coverage Gaps – Analysis and Resolution, was written to educate insurance and risk management professionals, and offers very detailed insights into this very broad topic. 

While this article is surely not recommended late night reading, several insurance-geek friends of mine have called to congratulate me for my work being cited (on pages 2, 4, 7, 9, 16, 17 and 18) with the likes of Freakonomics authors Steven Levitt and Stephen Dubner as a research source for this paper. 

Let me know if you actually read all 18 pages, and I will write a check to the charitable organization of your choice for your interest and efforts!  Meanwhile, please realize that if it takes 18 pages to educate insurance professionals on the common gaps in protection, then it requires a lot of close attention to many details for insurance professionals to design and manage a well crafted insurance program. 

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Shocked MonopolyWith alarming frequency, the media reports heart wrenching stories of insurance consumers who have had a significant property or liability loss, only to learn after the loss that the insurance policy they have purchased does not provide the proper coverage.   

While the reasons for an uncovered loss vary, I provide this one page overview  that details the three leading causes for uncovered personal property and casualty losses, and the solutions that are available to help prevent them.  Why not help those you know to examine these solutions —- before a loss occurs.

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No More Clutter !

No More Clutter !

 I am fortunate to have been asked to contribute an article by Private Asset Management, a publication of Institutional Investor that is focused exclusively on investment management, financial and advisory services to the high-net-worth arena, and especially on delivering breaking news before it appears anywhere else.   

While property and casualty related topics are not often covered by this fine publication, the editors have found that subscribers do have an interest in P&C topics that are both newsworthy and relevant to protecting the assets of high-net-worth clients. This brief article that I have authored explains how a simplified, effective and cost efficient coverage solution has been developed to replace the clutter, confusion and expense associated with the multiple insurance policies purchased by families who own valuable residences and personal possessions often located in several states.  Please contact me for more information about this innovative solution.

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From this month’s edition of the fine publication “Financial Planning”:

“Whether your client is high-net-worth or working to become so, it is incumbent upon financial planning professionals—often the most trusted advisors—to position insurance as a critical protection for the assets they have worked so hard to build. Working with an independent insurance broker is particularly important for high-net-worth clients who may have very sophisticated needs, but an independent broker can provide all of your clients with a broad choice of coverage and carriers. Many insurance carriers will be happy to give you a list of referenced brokers.

Your relationship with your clients is based on trust and good advice. Sound advice on protecting your clients’ assets is just as important as your advice on growing them.”  

Click here to read the article

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