22 Feb What’s the Worst That Can Happen?
Imagine that you are looking to insure a nail salon (there is a specific reason why I am picking this type of business). You meet with the owner, and as expected, liability limits come up. This business has enjoyed a positive loss experience and currently carries $1 million of liability coverage. That limit seems sufficient to the owner and possibly to you as the agency producer. After all, what’s the worst that could happen?
As noted by the following actual claim, a $1 million limit would not have been sufficient.
A Florida woman whose leg had to be amputated because of an infection after a pedicure reached a $1.75 million settlement with the nail salon.
According to the article, the nail salon employee cut the client’s foot during a pedicure. The cut became infected and spread quickly, partly because the client had a severe peripheral arterial disease. This circulatory condition causes narrowed blood vessels to reduce blood flow to the limbs. The client lost her home after being burdened by medical expenses from the amputation and needed help caring for herself and now is living with relatives.
According to the 2020 lawsuit, the salon worker used tools and equipment so dirty they posed a danger to customers, a claim the business initially denied. The lawsuit claimed the company failed to follow its policies, train its workers and properly maintain equipment.
How many nail salon owners or insurance professionals would have thought a claim like this could happen? I don’t know about you, but when I read these types of claim stories, I always question: Did they have enough insurance? Unfortunately, we all know what can happen when they don’t.
This claim points out a key issue when discussing limits with a client/prospect – what limits are enough? If the agency were to say in the above claim that $1 million was more than enough, they could face allegations of providing poor advice. Maybe, when a client asks, “what limits are enough,” the follow-up question back to the business owner should be, “what is the worst that can happen?” While benchmarking data may be available in some instances, somehow, I question whether it gets to the issue of the “worst that can happen.”
Another thought when working on businesses of a certain type, ask the carriers that you are soliciting proposals from what types of serious/severe claims they have seen or heard of. Also, checking out information on the web may provide some valuable information. If you can secure any claims of a more serious nature, consider including a brief narrative on the agency proposal of the details.
Somehow, it always seems that our thoughts on the “worst that can happen” are not even close to the “worst that can happen.”