One Small Mistake

Posted by on Jul 15, 2016 in Education | Comments Off on One Small Mistake

“All Because of One Small Mistake.”  That is what a client just said to me recently during a significant loss they just suffered.  That one small mistake financially, devastated his business and his life.

Depending on the nature of an insurance loss; it can bankrupt you, put you out of business, cause an emotional break down and more.  I know that seems like a scare tactic, but it is true.  I have personally witnessed it happen to my client.Insurance

I get it, our lives are busy.  We have so many irons in the fire and so many things we are trying to do that calling our insurance agent not only is not high on the list of priorities, it also typically is not something most of us want to even mess with.  I have a theory about that.  Of course a theory is nothing more than an educated guess or really broken down it is just an opinion.  And well, we all know what that means.  We all have opinions.  So here are few of mine:

1. The Giant Blanket Theory.  You can insure almost anything today.   The problem;  it takes money to insure things and knowledge of what you are actually insuring.  Many people don’t want to pay the money to make sure they are properly covered and don’t understand their exposure.  Don’t misunderstand, I am not saying people don’t want to be covered.  Of course they do.  People believe that because they purchase something that has the name “insurance” in it, people tend to believe it is a “giant blanket” that just covers everything because they have “insurance”.  That of course is far from the truth!    EXAMPLE#1 – I recently had a client that believed he had auto coverage because his lien-holder  sent them a great quote for coverage and it can just be included in his monthly payment.  In the end, he found out this is only collision coverage to protect the lien.  In the event of a real accident, he would have no insurance for the liability of others.  When he went to purchase a new vehicle he found out the MVR shows he has “no coverage” because technically he did not.  He had no idea. Perfect example of believing ” having insurance” means you are covered.Stress

2. Insecurity about understanding what is covered.  No one likes to feel like they don’t understand something.  Especially something you are required by law to have.  Something you have had since you were old enough to drive or rent a house or start a business.  Surely if you are intelligent enough to do all of those things, getting insurance is really just “something you have to do”.  Many people trust these decisions to family or friends,  themselves or someone on the other end of an 800 number that assumes you know what you are purchasing.  The truth is many people do what others do so because it is easier, and nothing bad has happened to them.

3.  Ignorance is bliss – That is such a weird quote to me, I hate not knowing things.  But the truth is, many of us are ignorant to what our insurance covers and what it does not cover.  This ties into #1 a little bit.  Here is EXAMPLE #2 – A client starts a business, well really he bought into an existing business.  The law required that they have commercial auto, and general liability.  They didn’t have any employees so no workers compensation.  The giant part they did not include was coverage for personal property.  It is not a requirement, so, they didn’t get it.  Where do you think they had a loss?  YEP, you got it, personal property was stolen.  No coverage because they did not have any coverage for that part.  I know it seems so easy now to say “well I would never do that”.  But you would be very surprised to know many people do it.  Since liability is the only thing that is generally required, many business owners not fully understanding the need, don’t get it.  Their focus is “doing business” and making money.

4. Not reporting the changes as they happen-  Our lives are full of changes.  We understand that.  We also understand that during all these changes your insurance agent is not the first person you think of to call.  However, we should be second, right behind your mom!  This is one of the things as an insurance agent I cannot stress enough.  We cannot call each of our clients every week and say HEY! have you changed anything recently?  (if we could we would)   EXAMPLE #3 – A fully insured client recently was in the process of moving from one location to another.  In the midst of the move, the client failed to contact our office to let us know they were moving.  During the move, they placed all of their personal items in storage in a storage unit. It was there a total of 8 days.  Someone broke into the storage unit and took every last thing.  Their entire business was shut down, they had no product, no records, no data.  All of it gone.  As though that devastation was not enough, to find out the loss was not covered because they never reported to location was an even worse blow.  The reality is, you need to review with your agent or carrier at least once a year.  If not more often.  I recommend at least reviewing your household or business each time you go to the dentist to get your teeth cleaned.  That is twice a year, and can be used as a reminder of: did I buy anything, sell anything, move, add a location, get a storage unit, etc.

Personal Property5. Assuming your agent knows everything about your business and your personal property.  As an agent I would love to tell you I fully understand every single thing about my clients, their homes, their businesses and all the things they do.  So I can always be on the lookout to make sure you are all protected.  The truth is, we do not.  You have to tell us about your business, and your home, and if you do something weird or different or uncommon.  I can assure you there is almost always a risk involved that potentially expose you to something you may have risk or worse yet, may not have coverage for.   We cannot know unless you tell us.  It then becomes our job to properly protect you.

asset protectionInsurance is truly designed to protect our most valuable assets.  Unfortunately, many of us treat insurance so carelessly as though it is just “an expense” you have and the cheaper the better.   The truth is,  if you take each of my 3 examples above and ask each one of those clients if they willingly would pay for the insurance that would have protected them from each of the 3 incidents would they?  The answer of course is always yes.   The fact is, you need to protect yourself, your property and your business.  Properly.  Don’t treat this as an afterthought or be looking for the absolute bare minimum in cost and coverage.  I can almost guarantee it will cost you more in the end.  If you cannot afford to purchase the appropriate insurance for the home, the car, or everything it takes to properly insure a business.  Then don’t make the purchase at all.  You are better to have less and have it properly covered than have more and leave yourself at an exposed risk.