Asking Questions and Avoiding Assumptions
Working with insurance all day long, it's easy to forget that your clients probably don't have the same understanding of insurance as you do. After all, when you deal with the same products day in and day out, the features they include and the items they cover or exclude become second nature.
For many agents, it just doesn't occur to them that the client for whom they're writing a policy may be making their own assumptions based on misinformation. That kind of attitude can have serious consequences - both for your client and for you and your agency.
Here's a good example of where making assumptions about what clients do and don't know can wind up costing an agency a significant amount of money: Recently, an agency owner recalled an incident where a homeowner was seeking insurance coverage for both his home and a very large storage shed located on his property. The agent wrote the policy, explaining to the client that both the home and the shed would be covered in case of loss. Several months later, the shed caught fire and was completely destroyed. When the client made a claim, he discovered that while the shed structure was covered by the policy, most of the items in the shed – expensive agricultural machinery – was not covered. The client assumed that when the agent said the shed was covered, he also meant the contents would be covered. Of course, that was not the case. Many of the pieces of equipment were classified as vehicles, which would have required coverage under a separate policy.
As you might expect, the homeowner filed a claim against the agent, stating that the agent did not adequately explain the limitations of the policy, leading him to believe the contents would also be covered in case of loss. The result: $64,000 in damages awarded to the homeowner. The lesson here is a simple one, although it's not always followed: Make an extra effort to understand the client's needs. Yes, it can be difficult to anticipate every need, but in the example above, the agent might have made the intuitive “leap” that the client would also want coverage for items in the shed. Don't assume the client will voice his or her needs, because sometimes, they may be acting on misinformation or incorrect assumptions. Just a few moments spent considering the insurance needs from the point of view of the client – and asking a few additional questions – could have saved the agent a considerable sum, and provided the client with the coverage he thought he was receiving in the first place.
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