E&O Insights: Personal Lines Accounts

Uncover Inland Marine Exposures for Protection and Sales Opportunities

Although heavy personal lines accounts are generally more favorable from an errors and omissions (E&O) standpoint, there is no doubt the potential for some significant claim activity — both in frequency and severity — is quite real.

In 2009, more than 30 percent of all E&O claims involved personal lines policies, including auto, homeowners, inland and wet marine, as well as flood. The average settlement of these E&O claims ranged from $25,000 to $30,000.

Specifically, I am addressing the inland marine exposure many of your customers probably have. Two questions to consider:

1. Do you know if your customers have an inland marine exposure?
2. If they do have such an exposure, do they have the protection they think they do?

If you are not sure of the answer to the first question, then it’s time to do something about it. How about developing a checklist to be sent annually to your personal lines accounts to update their exposures? There is tremendous likelihood that virtually every one of your accounts has an inland marine exposure that is either not insured or not properly insured.

Don’t You Think They Should Know?

Take jewelry, for example. What percentage of women’s diamond rings is specifically insured? The last number I heard was less than 25 percent. Why? I don’t know … but I can only wonder if your customers think that their homeowners policy provides the coverage they need.

For instance, if the stone is missing, is that covered under the contents limit of a homeowners policy? Do your customers know? This makes for a great educational opportunity. It could even lead to the sale of more jewelry floaters, and, if the customer doesn’t want specific coverage on the ring, at least they will know what coverage they do and don’t have.

What about collectibles? A recent Insurance Journal article noted that there are more than 2,600 collectible clubs. Odds are you have more than a few customers that have an exposure in this area.

Let’s look at porcelain figurines, a common collectible. While there may be some coverage for these under a homeowners policy, without a specific schedule I can only guess how a theft claim for these would be valued. In addition, what’s not covered under the homeowners policy? Breakage! Do your customers know this? Again, another great opportunity for education and increased sales.

How about coin collections, stamp collections and paintings, to name a few more potential exposures? Do any of your personal lines customers have any of these exposures? Not sure? Well, don’t you think you should know?

The Benefits Will Be Tremendous

Unless you are positive you are insuring 100 percent of your personal lines inland marine exposures, it might be a good time to implement an annual checkup procedure.

Develop a form listing as many inland marine exposures you can think of, send it to your customers, and encourage them to identify any exposures and contact the agency to ensure they are properly and fully covered. It would be advisable, too, to include a newsletter on the subject, catching their attention by noting some of the items I have referenced.

In addition, putting this information on your Web site will help your customers become educated on the exposures for which they have coverage and those for which they don’t.

Others Things to Consider

Office Communication — Be certain customers know they cannot leave a message on your voicemail or send you an e-mail to bind coverage. They need to speak with an agency representative. So, if one of your customers is on vacation and buys a painting, they must know that simply leaving you a voicemail message requesting coverage is not enough to actually have coverage go into effect.

Claims Handling — Don’t deny claims. Send them into the company. You might be close to 100 percent certain that you know whether there is coverage, but it is probably a good practice to start sending in all claims to the carrier.

Completion of the New Business Homeowners Application — When meeting with your customers to discuss this, ask questions to uncover any inland marine exposures. Be certain to get their signature on the application and checklist.

Receipt of the Policy — Advise clients, verbally and in writing, that when they receive their policy they must review it to make sure everything is in order. The agency should also review the policy to make sure it matches what was requested.

Education and Training — Does your staff need some further education in this area? Provide them with the resources necessary to ensure they understand the exposures and how best to insure them. Plus, some training on how to have a professional dialogue with customers on this issue will prove beneficial.

Do you have any potential E&O claims arising from the personal lines accounts in your files? Of course you do! You just don’t know which file it is! Take the time to educate your staff and your customers — and uncover some solid sales opportunities. The benefits will be tremendous!

Topics Claims Homeowners Training Development Professional Liability