In the insurance industry, you can have a phenomenal career in which you can make a personal difference to clients, especially as an agent. The price, however, is making the world a better place client by client rather than globally, and to do this you must become a coverage expert. You must care about your clients. You must deal with the frustration you will experience when you see how sloppy other agents are and sometimes, how much more money they make by being sloppy.
I will use the recent Colorado fires as an example of how a great agent makes the world a better place. Before going further, I want to confront experienced readers who will dismiss the following as being enviable but impossible. I have been gifted with the opportunity to work with thousands of agents. The following is only impossible if you do not care enough and do not know enough. Not knowing enough includes not knowing what is truly possible. What I describe below is being done by many of my clients who care enough and have spent the time, energy, and money to become true professionals.
When a fire occurs, especially a large fire, a family will most likely lose everything. They lose 100% of everything. They lose memories in the loss of photos, mementos, and computer memory. They lose all of their possessions, some of which they may be happy to lose, but mostly not. They must find a new place to live. If they have children, they must find a place to live, hopefully, within the same school district and, hopefully, without a longer commute. With luck they can maintain a normal grocery shopping routine at the very least. The ability to preserve some sense of normal becomes vital.
Recovery becomes a second full time job for an exceptionally long time. Hobbies go away. Socializing goes away. Dealing with insurance adjusters, contractors, building permits, debris removal, and architects becomes their new life. Finding clothes for everyone and finding a place to wash those clothes becomes the new norm. Finding all the passwords and account numbers tucked away so you can do your banking and pay for your insurance, healthcare and such might require weeks' worth of work.
All these points are reality and this list does not include any personal trauma or injuries that might have occurred.
A really good insurance agent can make an enormous difference. A sloppy agent can make their clients’ lives miserable.
As an example let me show the contrast between two agents. I will begin with the issue of insuring homes to value. Two parts are required to insure homes to value. The first part is to make the commitment to insure homes to value. That may sound obvious but many agents are taught to tell insureds they only need to insure their homes to the co-insurance requirement so they can save money without losing coverage. Neither point is true and quite possibly is the work of a sloppy, perhaps unethical agent, but most likely it was an ignorant agent with good intentions.
In today's inflationary construction environment, cutting coverage to the co-insurance level is a fool's errand because with virtually 100% certainty the result is coverage that is less than the co-insurance requirement. Also, the insured is not going to save any money. They are simply buying less coverage. To save money the insured would need to buy the same coverage for less money. It is like saying "I'm saving money by buying half a sandwich instead of a whole sandwich." Of course half a sandwich will cost less, but does it do the job? If I had my way, I would make it illegal to use this sales approach because to me it is patently unethical and is only used by sloppy agents. Good agents know that inadequate coverage can leave an insured holding the bag.
Replacement Cost Estimators (RCEs) are the second part and this is more of a gray area. Without getting into the morass that all RCEs are wrong (true), some are more wrong than others. Good agents can account for that in the policy and it is at this point that deep knowledge is imperative. No one should expect an agent to be a construction expert. When completing RCEs, do not suggest to clients that you are an expert and reiterate to them that RCEs are estimators for insurance purposes only.
However, if you learn to use them well, your clients will be better protected. For example, be thorough when completing them. Also, use common sense because sometimes the numbers calculated are nonsensical. Do not leave anything out. Some fires become so hot that concrete foundations are damaged. This means the foundations must be removed (more debris removal) and re-poured which means dirt work is also required. Include the foundations and dirt work in your replacement cost estimators. Many agents forget to do this or don’t know to do it.
Offer and really try to convince all insureds to buy replacement cost coverage on the structure. In my experience, the margin of error with RCE’s is between 10% and 50%. The replacement cost coverage gives the insured coverage for at least the lower end of the errors. Also, be aware that the difference between carriers’ replacement cost coverage varies significantly. Some are capped, some are not.
Also pay close attention to how the replacement cost endorsement works with co-insurance and improvements. During COVID many people improved their homes and forgot to tell their agents. Generally, improvements are excluded from the replacement cost endorsement, but may factor into the co-insurance factor. That would be a problem.
Really good agents, on this point alone, must dedicate themselves to deep coverage knowledge, carrier form by carrier form, because the difference may transform the ease with which a person recovers from a fire, versus a person who discovers they lack adequate coverage.
Such coverage knowledge must be paired with caring enough about your clients to talk to them. In today's world where we have geniuses telling us they can solve all problems with data, remembering to talk to clients can get lost. Talking to clients gives you the knowledge you need to offer the right coverages that will help them enormously through difficult straights.
In talking to your customers you also get the opportunity to educate them. Consumers often buy the wrong insurance because they lack insurance knowledge and sloppy agents take advantage of them. A key coverage that can make a wonderful difference when rebuilding is offering adequate Ordinance and Law coverage. Every agent I have ever spoken to about ordinance and law coverage tells me they have it covered because the policies they sell automatically include it. Whether it is or is not included is a moot point because the automatic throw-in coverage is almost always inadequate in a fire loss. Insureds need 50% to even 100% coverage. A really good agent who is dedicated to making the world a better place will emphasize and sell this extra coverage. Besides, this coverage is usually incredibly inexpensive.
I have worked with many agents through many catastrophes. I have worked with many agents in the same cities during the same catastrophes. The insureds of the most professional agents have always, in my experience, been able to rebuild their lives more quickly with much less angst, frustration, anger, and time spent. These agents have indeed made the world a much better place, client by client by client. You can join that club too.
The best part is this: For every client a professional insures well, there is one less client who a sloppy agent cannot leave hanging.
The industry needs to help change the world and a great place to start is one client at a time. Professional agents are the people who can make that difference.
NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand Insurance Education, Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information.
None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.