Be sure to check out the Comments section below for other examples….
The first incident is something I read online at Reddit where consumers often ask insurance questions:
“I have an auto insurance policy with AMICA. However, in April of this year, i reduced coverage, as I was not driving the vehicle at all. My vehicle was marked as not being driven, which I believe means I don’t have liability coverage.
“As fate may have it, I decide to drive for the first time in 3 months to a grocery store hardly a mile away, stop at a traffic light and proceed to accelerate as a green light is on. The vehicle in front of me stops abruptly and I had hardly any time to react and I hit the car in front of me on the bumper. There was no damage to my car and the other car had probably a bumper scratch. No visible damages to both cars. Cop gets called in and a police report is filed. We both state there’s no damage to car and no one is injured and I get home. I also call up insurance to put back my liability and all others back on the policy.
“Today 3 days later, the other party files for injury claim. I get a call from my insurance company today asking the details and I provided them. I am wondering as to how will this be handled by insurance, as I may not have liability insurance at the time of the incident. Will there by any out of pocket expense?”
This is exactly why I’ve written before about suspending auto coverage:
Hopefully, in his case, he only suspended physical damage coverage, as some states may not allow liability coverage to be suspended while the license is active. Sadly, he doesn’t even know what coverage was suspended and may, in fact, have simply cancelled his coverage.
The second incident was a marina fire. I live on a lake across a cove from a marina. In 2013, a tornado came through our property on its way to destroying much of the marina. This time, according to at least one account, a houseboat owner was working on the engine in his slip, starting and stopping it many times throughout the day, and perhaps gas fumes built up until there was an explosion and fire. Fortunately, no one was injured.
According to news accounts, three houseboats and a pontoon boat were completely destroyed, along with damage to other watercraft, not to mention significant structural damage to the docks. This is purely a guesstimate, but I would not be surprised to learn that the damages exceed a million dollars. I’m also guessing that the person responsible had watercraft liability insurance but I wonder about the limit and whether he has an umbrella policy.
People with watercraft need umbrella policies. REAL umbrella policies. GOOD umbrella policies. And probably not just $1M limits, depending on both the assets and income (now and in the future) of the insured and the exposure to loss.
When we got our pontoon boat in 2013, I added watercraft coverage to our personal lines account and our $2M personal umbrella policy. The cost to extend the umbrella liability to the boat? Seven dollars. Yes, you read that correctly, SEVEN ($7.00) dollars. What watercraft owner can’t afford an additional $7 premium on an umbrella policy?
Do you share stories like this with your customers and prospects? Do you have success stories where you, with great effort, convinced someone to buy a coverage or policy they didn’t think they needed until they did? Stories and testimonials are one of the best sales tools you have.
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Address the severity of boating exposures, for example burns are extremely expensive. The ticket to a burn unit is well over $1,000,000 a month.
Here are some real examples:
a. Two friends were allowed to use a boat for a days fishing. They failed to properly vent the engine area before turning the ignition. The explosion blew both men through the marina roof. Through the roof. They had burn injuries from the blast and trauma from their trip through the roof timbers and metal sheeting.
b. A successful auto dealer was hosting a party and some young adults were water skiing. One skier fell. Somehow, the boat went over him in the water and the prop sliced him six ways from Sunday. He was severely injured.
c. Water sports involve near drownings with resultant brain injuries. These are incredibly expensive.
From an agent:
One of my big insureds, internet retailer with $27,000,000 year in sales never bought Cyber. He didn’t even want to talk about it, he was protected.
Today the Department of Homeland Security showed up. The insured had no idea but since August 2019 his system had been hit with Malware, the malware was sending credit card numbers back to the hackers and that’s why the Feds got involved, The banks were complaining about these cards being compromised and they tracked it back to my insureds business. You ready for this, 90,000 transactions stolen!!!
His website is now shut down, he’s losing $75,000 in sales per day. He has to pay the banks for each card they have to replace (est. about $5 each), he’s going to pay a lot of IT people and forensic techs.
I figure the insured lost $500,000-$750,000. Cost for a good cyber policy would have been WAY less.
This week on our local lake Facebook group, someone wanted to rent a pontoon boat this weekend but none of the rental places had anything available, so she wanted to rent someone’s private boat. At least 3 people were agreeable. I suggested that they check their watercraft policy.
Last year on the NextDoor app, someone was looking for a private dock slip to rent for the summer to keep their boat. I suggested they look at the business use exclusion for damage to other structures on the HO policy and the applicable liability exclusion(s). And, while they were at it, ask about whether they even have coverage for their dock since the unendorsed policy likely only covers structures ON their residence premises, not the lake itself. I’m on a bluff and it would cost about $50K to replace my dock, lift, and stairs.
This is why people should use good agents who understand exposure analysis and how to insure or risk manage it. I bet at least 90% of the docks on this lake are uninsured.