So this topic has been on my mind a lot lately as I continue to get people through the door cutting corners on their insurance program and for me its just a very frustrating thing to see as an agent but even more so as a consumer of insurance myself. When people cut corners in their own planning it leaves gaps in what is covered when they hit me as well. When they get lower limits it provides gaps in how much I am covered for if I am hurt by their mistakes. While many insurance companies will do the right thing in the scope of their contract for the insured many insureds carry state minimum liability, don’t disclose drivers in the household which results in denied claims when those undisclosed drivers hit you, as well as, your agent might be convincing you that uninsured motorist is not necessary so they can retain your business and keep your premiums low.
There are a lot of underhanded practices in the sales world of insurance and its quite frustrating.
Even more so, the commercial insurance world amplifies this. Many agents are not trained properly in commercial and assign incorrect class codes, remove uninsured motorist from commercial vehicles and coach the client to file claims through workers compensation programs, and sneak coinsurance clauses into contracts that force the insured to self insure a large portion of their coverage which might leave you high and dry.
I would venture to say that a lot of your commercial contractors – people you have in your home every day like your carpet cleaner, tile cleaner, maid service, and maybe even your favorite restaurant are not properly insured whether they do not carry enough insurance or any insurance at all.
A perfect example of this happened to me recently;
We quoted a local “Aquatics Center” in Las Vegas. They were purchasing the business from another individual but it seemed as if one of the new owners was a past swimmer at the collegiate level which doesn’t make them a swim lessons professional by any means but at least they have been in pools for a significant amount of time. Needless to say, swim lessons can be dangerous and drownings are a very real thing especially when you get several kids in a pool and one instructor who is focused on possibly one or two students at a time. This new owner turns down my quote for $14,000/year for proper coverage for this risk -General Liability, Business Personal Property, Lost income, Tenant Improvements coverage for the pool, etc. It was a great policy. To opt for a quote they got from another Agent. When I asked them what carrier it was they responded with the name of 2 carriers I had already approached and had turned down the risk. So I disclose to the insured that I had already approached that market and got declined so it was hard to believe they would accept it now and even sent them the decline email from the underwriter showing that they did not insure swimming pools. Come to find out the other agent improperly insured them under Swimming clubs which is nowhere near the right class for swimming lessons and gives the carrier definite rights to decline claims and opens the agent to huge E&O loss potential.
So why does this matter and why should you be concerned?
This is how a lot of business owners cut corners to save cost on proper insurance and there will be one of you who reads this who sends your kids for swim lessons here and has some sort of mishap and then there is no course for repayment from the insurance company because the business owner didn’t do the right thing upfront. And this is just one example of many that I see every day and if you ask a lot of other commercial insurance agents they will share similar stories.
Why Do You Need To Be Selfish About Your Insurance Planning
We live in a day and age where people are doing horrible planning, agents are less skilled and take their role less seriously, and everyone is just focused on bottom line. So it’s now your responsibility to make sure your family is protected which means you need to have a lot of protection for people who are underinsured or uninsured because that is the reality of this. If your kid falls in a pool and drowns and the owner has no insurance, how devastating would that be? I mean there’s no amount of money that can fix that but at least there wouldn’t be mourning plus financial devastation from the funeral bills, medical bills, and just lost income from being away from work potentially. I wouldn’t be able to come back to work and do what I do for a while if I lost one of my girls to something but would be furious if I found out that the person responsible didn’t even take enough responsibility to get the right insurance to make sure at least those burdens were lifted off me for their mistake.
Now in all fairness if this happens MOST carriers require every agent to have Errors and Omissions insurance that would essentially be a backup stating that this agent made an error and therefore their insurance will protect that potential denied claim because of the agents error, but what if they documented everything and the insured knew it was incorrect? If the business owner accepted the policy even knowing it was improper for their business, has no assets, and now, no insurance coverage as well then we are left up a creek with no paddle.
My point is here that insurance is becoming more and more necessary but less and less talked about. We are getting more and more people who buy on price instead of value and they leave us all exposed to these issues. Your parent’s parents never had to worry about if their plumber had the right insurance because they were all taught by their parents to carry the right coverage. Nowadays you need to be selfish and insure yourself as if nobody else is insuring themselves because good chance that there is at least one or two gaps in coverage regardless if there is a policy in place or not.
That’s my rant for the day. I hope this sheds some light on a crazy situation going on in our marketplace nationwide and gives you some insight on how you should be planning.
As always, if you need a quote or consultation please reach out to us at KMH Insurance Group 🙂
Have a blessed Monday!