10 Aug The Dangers of Presuming
Most folks know the dangers of assuming. If you are not sure, ask one of your colleagues; I trust they will educate you. But how many know the dangers of presuming, essentially taking something for granted. While “presuming” may be okay in your normal life, there are some definite dangers in the world of E&O.
What could “presuming” look like? A good example involves a true story that I dealt with many years ago in teaching an E&O class focused on the E&O exposures of personal lines. On the subject of personal umbrella coverage, I asked the class (about 35 people) when they bring up the subject of umbrellas. One of the students commented that when she meets with the prospect, she “sizes them up” to determine whether she felt the prospect 1) could afford an umbrella policy and 2) whether they had the assets worth protecting.
Making these types of presumptions is something that agents should avoid. First, how can an agent know whether a client can afford certain types of coverage? My example uses umbrella as the referenced coverage, but this could apply to any coverage such as cyber, D&O, EPL, business interruption, products recall, and I could go on and on. I have also heard “confessions” from agents when a client asks for a quote on a higher limit only to have the agent advise the client, “the limit you have is plenty.” Quite honestly, how can an agent rightfully feel confident advising a client that the limit of a specific coverage is plenty? Can an agent really “size up” a client and presume that they can’t afford the coverage?
And using the true story I referenced above that the client does not have enough assets to warrant purchasing a personal umbrella, this is a tremendous fallacy. Another agent spoke up in that same class and commented that her agency had a client (a young man who had recently graduated from college) involved in an accident. The limits were not enough to pay for the damages, and the client now has their wages garnished to the tune of $500,000. Can they sue you for what you don’t have? Yes, they can, and they will.
So what should an agent do? As I have referenced in many of these blog postings, I am a firm believer in the concept of “customer accountability.” In other words, provide the client with coverage and limit options to consider, then let the client decide. Don’t decide for them!
There are five very dangerous words often used in the insurance world by prospects – “Just duplicate what I have.” Their focus is one thing and one thing only – price. By providing the prospect with options both on coverage and limits, you require them to decide. If they choose to go with essentially what they had before, that is their call, but they will not be able to state that they didn’t know other coverages they should consider or what limits might be available for those coverages.
Certainly, part of the benefit of this approach is an added level of E&O protection should a problem develop. However, you may find that by providing coverage and limit options, you will sell more insurance. So, let me ask you the question, do you find yourself presuming that the client can’t afford certain coverage or that they don’t have assets of a certain level? If so, today is a good day to stop presuming.