This is a guest blog from Tim Wahl, CIC, commercial marketing manager of the Gallaher Insurance Group in Clayton, Missouri. It is based on his Coverage Advisory Committee article “When It Comes to Serving Clients…Do You Lead or Follow?” published by the Missouri Association of Insurance Agents in their Missouri Agent magazine, September/October 2014.

I’ve heard it from agents for years…Consumers (and businesses) only care about price, not coverage. Tim is living proof that this is not true IF you know your products, can identify the gaps in prospects’ current insurance programs, and know how to sell on the basis of coverage instead of price. Tim has shared with me many times examples of commercial insureds who come to him wanting to save money and leave paying more than they’re currently paying BUT with MUCH better coverage. Tim proves time and time again that coverage CAN be sold. It’s a win-win for all concerned. So, on with Tim’s story…

 

When it comes to policy limits, forms and coverage, being a leader pays off for you and the client! Are you leading your clients so they understand that not all insurance is equal?

Home and auto insurance commercials or ads touting how people can save 15% in 15 minutes (or less) drive me crazy. I’m an independent insurance agent who cares about clients and I want to help them protect themselves through insurance coverage. I’m not sure about you, but it takes me longer than 15 minutes to learn enough about a customer to even begin to talk about their insurance. There is too much to ask! I don’t sell a commodity. My job is to help lead clients through the process of purchasing insurance to properly protect their financial well-being.

First, let’s get one thing straight: a commodity is something which is the same or very similar no matter the source. Gas, oil, drinking water, and electricity are examples. Insurance is not a commodity because not all carriers use the same forms and language! One carrier’s policy form may be 13 pages long, while another carrier’s policy on the exact same risk is 70+ pages. Clearly these two policies are NOT the same. Which policy is the best? It all depends on what the policy coverage forms say! Sometimes forms add coverage and sometimes forms take coverage away. Insurance coverage is most certainly not a commodity because coverage and coverage limits vary by carrier.

A family buying a nice home and shopping for insurance was referred to me. The husband proudly told me he already had three other quotes and just wanted to know what my premium was. It would have been easy to say I couldn’t help him (because he was a shopper) or worse yet just give him a quote simply to give him a quote. Instead I asked questions and I counseled the prospect on how insurance coverage worked, why it was needed, why insurance was important, why one company’s policy might be better for them, and showed them how policies could be tailored to meet their needs.

The prospect’s household had what I considered high earnings ($80,000 per year) and assets, and were driving around with auto limits of $50,000/$100,000/$50,000. I sold the family insurance for their new home (with earthquake and jewelry covered), auto insurance (with $500,000 limits) and a $1,000,000 umbrella policy. How did it happen? Three other agents were selling premium thinking insurance was a commodity and I was selling coverage. I told the family they were one auto accident away from losing everything.

“What do you mean we are one accident away from losing everything?” asked the prospect. I explained that in our legal system if you cause damage you are liable and can be sued. They come after your assets and future earnings; part of every future paycheck goes to them. In fact, they simply have your employer send money directly to them saving you the trouble of writing a check. Wage garnishment will stop once the judgment is paid off. Insurance protects a customer’s cash and cash flow, assets, future earnings, family, and lifestyle.

What I find so rewarding is that once people understand how they can be sued and how their future wages can be garnished, they are usually very open and willing to purchase insurance limits at a level that will better protect their assets and lifestyle they have worked so hard to obtain by purchasing an umbrella policy or better primary coverages.

Instead of pretending insurance is a commodity, and following along with how it’s treated in the media, become an insurance coverage leader! Since personal lines is most often (and erroneously) considered a commodity, below are some examples of exposures and questions to address with personal lines prospects.

Home insurance leaders

  • Make sure owners of a home are named insureds! Offer guaranteed or extended replacement cost (if possible). Special form contents coverage is better than broad form coverage.
  • Do they have enough ordinance and law coverage?
  • Earthquake: if you can get it, buy it! Why? It not only protects the structures but also triggers coverage for loss of use should an earthquake occur! Insureds ask me what I think about earthquake coverage and I tell them I buy it because it would be really bad to have a home loan, not be able to live in my house, not have insurance to fix my house, and not have insurance to pay for living somewhere else.
  • Every home policy needs personal injury coverage.
  • Is their water backup coverage limit high enough?
  • If they have a cosmetic damage exclusion on their current policy, ask the customer how they would like having two different colors of siding? New siding mixed in with old siding? Ask if they would be okay with their metal roof covered in dents, and having no coverage for repairs. Many times they can’t sell the home without cosmetic damage being repaired, so it becomes a self-insured loss.
  • Dog bite exclusion: First see if they still have the dog that triggered the exclusion. Sometimes you’ll find the dog died and they now have a poodle, yorkie, or some type of dog the carrier would be okay with removing the exclusion on. Some exclude all dog bites and some exclude only a specific breed/type of dog. A total exclusion should be avoided so the insured doesn’t lose coverage for bites from all types of dogs. Many pet owners have more than one dog.
  • Some carriers still have one all-peril deductible: a $1,000 or $2,000 flat deductible is better than a higher percentage deductible.
  • Ask each prospect/insured if they own anything old, unusual, rare, exotic or valuable. The answers I’ve gotten over the last 24 years have been amazing! I’ve insured the largest shotgun shell collection in the world (35,000 shells), one of the largest Barbie collections, dinosaur bones, lots of artwork, and huge toy truck collections. The list goes on and on. People don’t mind buying coverage to protect their valuable things. In fact, they will buy the best coverage because these items are important to them!

Personal auto leaders

  • Ask who owns the autos and makes sure all listed owners are adequately protected. I find many errors here. When quoting and making policy changes (once you write the account) ask whose names are on the title; you will be shocked with the answers you receive. Each person or entity on the title is legally responsible for the auto and can be sued.
  • Ask if they own any other autos besides the ones on their current Dec. page! You will again be shocked at the answers you receive. Let the other agents only work on autos listed on their current policy while you point out to the insured the additional risk from children’s vehicles of which they are co-owners, which are oftentimes insured at very low limits by the child, many times without the co-owner even listed as an insured on the policy.
  • Do they have high enough limits? If their auto limits are low, tell the prospect/insured that they are one auto accident away from losing everything! It’s that simple!
  • Do their under and uninsured motorist limits match their main auto liability limits? If you haven’t yet lived through a really bad UM/UIM claim your time will come.
  • Check to see if they own any trailers, recreational vehicles, boats or jet skis. Explain to the prospect/insured how they are liable for these items.

You know the saying, “We have met the enemy and he is us?” Insurance carriers communicate with the public via ads marketing low prices leading the public to think insurance is a commodity. Let’s be leaders and show our customers and prospects that insurance is not a commodity!

Copyright 2014 by Tim Wahl. All rights reserved.

For reprint permission, email tim@gallaherinsurance.com.

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information

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