insurance purchasing

Insurance Purchasing Decisions and Claims in Social Distancing World

By Chip Merlin

The world is no longer the same since the COVID-19 pandemic outbreak. The human experience has been largely one of personal social interaction. “Remote” everything is the new paradigm for the foreseeable future. So, how does this impact your insurance purchasing decisions and even claims if you are unfortunate enough to suffer a calamity during this pandemic.

My biggest concern is that many people who are now learning to do everything over the internet will also think they are experts at determining risks they must be concerned about covering and try to investigate the available insurance market through online purchasing. Online insurance companies claim this is the way insurance is going to be purchased but they have to say this or they would not be online. Seriously, are they going to warn people of the gaps in coverage or how “cheap” in quality their online insurance really is?

This is not the same as online investing where some academics suggest that people can throw darts at stocks and pick them as well as experts. Insurance coverages and polices do not work that way.

Given the world’s change in circumstances, the value of quality risk managers cannot be overstated for businesses and those of affluence as well as personal advice from passionate insurance agents developing insurance programs for individuals. Few people are trained to do this and the field of insurance and the risks we face are forever changing. You cannot purchase insurance like you can an ETF. One size does not fit all and there are no longer standard policies so that purchasers of insurance can expect the insurance policies available fit their individual personal, professional, and business risks.

The online companies selling policies and inviting purchasers to believe that the complexities of purchasing the “right” insurance are doing a disservice when they suggest it is so easy a “cave man can do it.” It might be easy if I am just out of college, have no assets, and can only afford the cheapest of insurance. Suggesting the same to clientele that are further along the line of career development, have families, ownership in businesses, and are developing assets worthy of protection and provide a hedge against disaster for more than just themselves is simply wrong.

The more affluent and successful a person or business becomes, the more important it is to engage insurance as a financial protection device. The poor rarely need insurance because they have nothing to lose. Asking a person who is financially successful because of efforts in one field to become their own experts in insurance risk is nonsensical because nobody other than insurance agents and risk mangers study insurance and the products that are available.

I am sometimes amazed at judges who pontificate that people have a duty to read their insurance polices and understand what they mean. Really? Nobody reads all their insurance policies and renewals. If you tried to do so, you would likely not understand what they mean. Insurance agents have to take classes and a test to get a license just to prove to the state authorities that they understand what they are selling.

I decipher the undecipherable for a living. I advocate for coverage that my clients are hoping exists. If judges in different states can come to different conclusions about what these insurance polices with the exact same language mean and how they operate, why is it that they make rules that policyholders have a duty to understand their insurance policies?

Not all attorneys or doctors are experts or limit their practice to one area of the law or medicine. Not all insurance agents are passionate about what they do and their customer. Finding a good insurance agent that is passionate about what they do, curious about you the customer and what your specific needs are and can demonstrate a high level of expertise worthy of trust is the type of agent anybody of success should demand.

It is not uncommon to find that many insurance agents are not that passionate, detailed, and driven to provide the exact product needed. For example, a very affluent family with a land trust owning a family business found its long-time agent retired. The young one failed to include the operating entity on the property insurance and misnamed the family trust as the named insured. Of course, when does a loss happen for the first time in two decades? It is amazing how bad providence routinely occurs when prior incompetence can compound that bad situation.

The bottom line is that the more successful a business or individual is, the more the insurance product can help. The more it can help, the more complex the insurance polices are that contemplate risks unique to more successful businesses and individuals. While the current crisis may lead us to think we can purchase everything over the internet through our own study, that notion does not work with the insurance product. To avoid having to call a lawyer to clean up an insurance purchasing mess, the best practice is to hire a great risk manager or insurance agent to prevent one in the first place.

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