10 Mar Are You Educating Your Customer?
Let me ask you a question. First, put yourself in the situation of being the client, not the agency person trying to sell the customer. Would you rather have your insurance with an agency that sells you a policy with minimal, if any, explanation of what is covered? Or would you rather have your insurance with an agency that helps you understand what is and is not covered? Personally, I would rather go with the latter – I can deal with bad news but I don’t like surprises. Surprises such as at the time of a loss, my agency now tells me that that my exposure was not covered. In other words, they help me understand my insurance. Chances are you’re the same way.
For example, let’s look at watercraft insurance. With summer approaching, there is a good chance that your agency will have some clients getting out on the water for some fun and relaxation. Unfortunately, as we all know and hear about, problems do occur with the various watercraft exposures.
In reviewing my homeowners policy, there is some property and liability coverage for watercraft. However, there are limitations on length of the watercraft, the size of the motor, the use, etc. Let’s take the scenario of a client coming into your office with a type of watercraft that would be eligible for coverage under an endorsement in the homeowners policy. Is that the only option you provide the client? What are the exposures potentially not covered by watercraft insured under a homeowners policy as compared to a stand-alone watercraft form?
- There is certainly the potential for the watercraft to be pulling people in the form of waterskiing or tubing. One of those individuals gets hurt and needs medical attention. They look to your client’s policy for coverage since your client was driving the boat. Is the Med Pay coverage under the homeowners policy available for this exposure? In many homeowners policies, it is not.
- Your client is refueling their boat and an accident occurs resulting in gas being spilled into the water. Is there coverage under the homeowners policy for this “pollution” exposure? No, there is not.
- The watercraft is involved in an accident causing damage to the boat resulting in the boat needing to be towed to shore. Most homeowners policies do not provide coverage for this exposure.
In addition, the valuation options under a homeowners policy are more limited, typically only providing coverage on an Actual Cash Value basis. Some may provide coverage (often at an additional premium) on a Stated Value basis. Is Stated Value much better than Actual Cash Value?
The following is what Stated Value says about a total loss:
“In the event of a total loss, we will pay the Stated Value or the Actual Cash Value, whichever is less.”
To get the protection desired, the better approach is to secure coverage on an Agreed Value basis. While this is superior to Stated Value, this level of coverage is typically not available when the watercraft is endorsed onto a HO policy.
The summer should be all about fun and enjoyment. Without the proper coverage, at the time of a loss, this could be all about pain and heartache. When dealing with your clients on their watercraft exposure, provide them with options to consider. Not only will this allow your client to make an educated decision, it will also serve as an element of protection should an uninsured problem develop.