Frequently I get the opportunity to peer review the work of another insurance agent. Folks who don't work in the industry may not realize just how much insurance policies are customizable. The features, coverage amounts, and endorsements an agent chooses to include or ommit from his/her policy can be somewhat telling about the agent that wrote it. When I sat down with my staff to try and figure out how many configurations there are on a standard auto policy we came up with almost 25 million variants. Thats nearly 25,000,000 versions of something that many people are confident they can purchase with a few clicks and end up with good results.
I am not so confident. I am even less confident when I see some of the homeowners policies that are written by agents who were referred by their bank or real estate agent. While there are 25 million versions of a standard auto policy, there are even more options for a homeowners policy.
Well lets start with replacement cost. A good agent knows that replacement cost should include an amount for debris removal and this number has nothing to do with an appraisal using cost approach. The cost to rebuild a home if a fire or hurricane destroyed it is probably going to be more than building a home from scratch on an empty lot. Do insureds know this? Probably not. Should they know this? Well, in a perfect world, they wouldn't need to if their agent was looking out for them.
Then we look at the contents coverage on a home. I am routinely dissapointed to see agents cut this coverage from the industry standard 50% of the replacement cost of the home to 30%. This decrease in coverage would mean a large different in coverage if there was a total loss but it also represents the possibility that smaller losses could be assessed with a coinsurance penalty.
Next we have the optional endorsements to add back valued coverage that is limited by the policy. Water damage coverage on an older home? Property floater for a gun collection? Sinkhole coverage? Equipment breakdown for the AC?
The solution is simple.
1.) Make an appointment
2.) Talk to an agent
3.) Review your coverage