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Are You Kidding? It Has To Be Covered!

Avoiding insurance screw ups because too late is too late.

We all have it, or should have it, but don’t know much about an important product: Insurance.

It's not the sexiest of topics, which is why you should let your agent guide your decisions.

life raft on a balcony
Are you prepared?

Mike Gehman, Innovative Insurance, answered some typical and not-so-typical questions. I approached Mike because he not only sells insurance, he’s proactive in educating his clients before and after the initial sale.

How long have you been an agent?

I’ve been an agent since 2003. That’s 18 years!

What do you like about being an insurance agent?

Different clients, different days, different claims, different risks…..lots of variety in the work, and always something new.

What should people look for in an agent?

I know when I look for an advisor on taxes, financial, medical, legal, etc., I prefer to connect via referral if possible and like to see experience and history with similar issues or tasks that I am seeking help with. And after the initial engagement or “post-sale,” you can tell if your experience with the agent regarding communication and attention is to your liking.

Does longevity with an agent/company count? (For the almost 5 decades I’ve had insurance from several companies, I NEVER heard from them after the sales call and the day I said I was moving on.) There are some definitive benefits to longevity with an insurance company. Many companies offer discounts for longevity thresholds. Some companies offer conditions of policies being “non-cancellable” after specific points. Beyond these, there are some subjective benefits. A history with a company could give your agent leverage when advocating for a billing, claim or service problem, etc.

What do you wish customers would do more of, more often?

More open communication without holding back things the customer thinks the insurance company “may not allow.”

I question why people would spend $1,000 on a policy and materially misrepresent details on the application. At the time of the loss, when the insurance company does its homework, the claim will get denied. So why pay $1,000 for a policy that won’t cover a claim. Just go without the insurance if that’s the case. Or pay $1,200 for the right policy and have the proper coverage at the time of the claim.

What do people forget to insure?

Maybe it is “forgotten,” or maybe it is “neglected,” but it’s their physical body. It’s easy to insure machines, cars, tangible items, and dwelling structures. But the one “asset” that is most responsible for a lifetime of income is your physical body. For an individual who has a family that relies on that income or a small business that relies on that one key functioning employee, a life insurance and disability policy would be missing in most insurance plans.

Also, check with your agent to see if all drivers in your household are covered. Adult 'children' with cars in their own names are not always covered.

How should they document their valuables? How often? Does it need an official appraisal?

Pictures and appraisals. Insurance companies have varying rules on appraisals. For example, when writing new insurance, one company may require a current appraisal (within the last year) for any individual piece of jewelry that is $10K or more. Once the insurance is written, the value of that jewelry could change over time. The frequency of obtaining new appraisals would not be a requirement of the insurance company, but it is good practice for the policyholder to keep the insurance limit on that jewelry up to date.

For example: What if a ring was insured for $8,000, but after three years of inflating gold prices, the ring is worth $14,000. Without getting a new appraisal, the policyholder would be underinsured and receive only $8,000.

Does the average homeowner need an umbrella policy, and how do they affect the premiums on standard policies?

If you accidentally run over your neighbors' mailbox, do you need an umbrella policy? No.

But, if you’re on the PA turnpike and accidentally change lanes with a car in your blind spot, and that triggers a three-vehicle accident, and one of these vehicles is a church van with eight kids in it? Yes!

An umbrella policy is a personal decision based on risk tolerance level. No agent can predict what will happen and the ultimate costs or damages of an accident. An umbrella policy with a $1,000,000 limit for a family with a home and two cars can be in the neighborhood of $100 to $150 per year.

Would you share a story about a client that didn’t take your advice?

One client comes to mind. They had an engagement ring that was, of course, very sentimental. I recall the phone call because it was a Friday night, and she was very upset and emotional.

The client had decided against insuring the $12,000 ring. The premium cost would have been about $100 per year and covered the ring at $12,000 with no deductible. I had to remind her she signed off the rejection for coverage. While I remember the story vividly for the angst of the customer, the good news is that miraculously the customer found the lost diamond in the house over the weekend.

Would you share a positive story?

Just recently, with Hurricane Ida. Many homeowners who have NEVER had water in their basements had water in the basement from this historic rain event. I had more than one customer in this situation. They were pleasantly surprised and grateful that they took the coverage beforehand and had some coverage.

Should we have an annual insurance checklist for auto, business, home? How?

For the policyholder, it's just one step: Contact your agent. Carriers and agents often have template guidelines to talk through annual updates. Carriers often mail these out to policyholders directly once a year, too. But don't wait for the company; be proactive. This exercise will reveal any changes to be discussed for updating coverages, etc.

How long should people keep their policy documents? (Original, latest update, what about the in-between?)

I would keep the original copy of the policy and declaration pages and the subsequent renewal declaration pages each year. I would keep these for the life of the policy plus seven years. For transactions in between, I would keep them until the next set of renewal declarations is received.

Is there any reason to keep the interim billing statements?

For record-keeping purposes on billing, this would mostly be personal preference. There would be no policy language type detail or coverage information on a billing statement. Many companies mail coverage/policy documents separately from billing documents.


Do These!

Put a note and alarm on your calendar to contact your agent a month before the renewal date. This will give you, and them, time to review your coverages before a disaster.

If you don't have an appraisal, or think you don't have enough valuable things for an appraisal, at least walk though your home and business to take pictures and videos of what you have. It's hard to remember what you did last week, let alone what pictures were on the stairway wall or the shape of the vase in the display cabinet.

And finally, reach out to your trusted advisors who work hard to provide you with sound legal, financial, insurance, and health advice. They can't know what you need until they hear from you.

In this 2 session class you'll learn what to keep, where to keep in, and know what information to gather before an emergency.


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