The process of selecting insurance carriers is not easy. As a buyer of insurance, you want to be sure you are selecting the carrier that is going to meet your unique needs and provide you with the right coverage, claims handling, and claim service Many clients rely on their broker’s recommendation when selecting an insurance carrier. The insurance brokers have intimate knowledge of the carriers they represent from services to policy minutiae. Knowing specifics around why one carrier is recommended over another is important. To the untrained eye, high-net-worth insurance carriers appear to be the same. However, there are some significant coverage and service differences you should understand.
While coverage and service are two areas to explore, there is a third area that often goes unaddressed: the financial motivation behind brokers’ carrier recommendations. Here are some questions to ask to gain a better understanding of the factors you should understand prior to moving forward with a recommended carrier.
Coverage
When determining what kind of coverage you need, your line of questioning should probe how specific policy coverage differences make one carrier superior to others. We’ve provided guidance on things you should consider when purchasing homeowner’s insurance, auto insurance, valuables insurance, cyber insurance, and excess liability.
- Homeowners
- Does the policy automatically cover legal entities that own the location? Are trustees afforded coverage?
- What are the key coverage considerations?
- How are partial losses handled? Will everything get replaced or just the damaged portion?
- If we do not increase the coverage limit based on the carrier home inspection and appraisals, will it affect the amount that will be paid in the event of a covered loss?
- Are there limitations on loss of use to a secondary residence?
- In the event of a covered loss, will the insurance carrier pay to install a loss mitigation or loss prevention device?
- What are the exclusions that we should be aware of?
- What are the policy credits that we are missing, and what do we have to do to have the missing credits applied?
- Auto
- What are the advantages of original manufacture parts?
- Are there limitations on towing when a breakdown happens within a specified mileage from home?
- Is there a special deductible for windshield claims?
- How are high value cars handled?
- What are the differences between the collector car policy form and the standard auto policy form? Does the collector car policy have a mileage limit?
- Is there liability coverage when I am driving a rental car in Europe? How does coverage respond when I am traveling in Europe and have an accident with a rental car? Is there coverage for the damage to the rental?
- Can you explain uninsured and underinsured coverage?
- Valuables
- How often do we need to obtain appraisals on our jewelry, fine arts, wine, and other collectibles?
- Is there coverage for loaned or borrowed jewelry in our custody?
- Does the policy afford additional coverage for disputes of rightful ownership?
- Can the carrier make a lending institution an additional loss payee?
- Can I insure my couture collection?
- How is art media handled?
- Cyber
- Can you walk me through how coverage responds?
- Does the coverage respond when there is a voluntary parting of funds?
- Does the policy pay to replace electronic data that was lost or compromised, and restore photos? Does it cover photos or just data?
- How does the policy respond when the money was held in a trust account or a personal asset protection vehicle?
- Does the coverage respond when you or your family is a target of cyber extortion and cover a demand for payment?
- Is there help to restore identity after an identity theft incident?
- Excess
- What are the required underlying limits we need to maintain?
- Will coverage drop down to first dollar where coverage provided by the required underlying insurance is not required?
- How does coverage respond for excess uninsured or underinsured motorist coverage?
- Is Directors and Officers (D&O) liability included in the excess policy? What are the limitations? Is the D&O coverage limited to property damage and bodily injury? Is there coverage for wrongful acts or fiduciary issues?
- Is there coverage for employment of domestics?
- Is there coverage for my condo board participation? Is it limited?
Claims Handling
At the time of loss, how a claim is handled by the carrier is critical. Your time is valuable, and any delay can become problematic. It is important to note that not all carriers handle claims the same way and because if this it is imperative you fully understand their claim philosophy and claim handling process.
- What is the carrier philosophy when it comes to claims?
- Are the people adjusting the claims members of the carrier’s staff or are they third party contractors?
- What authority does the claims adjuster have to made on the spot decisions?
- What is the process if we are not satisfied with how a claim is being handled?
- Will we have a single point of contact with the carrier throughout the claims process?
- Can you share your experience working with the recommended carrier on claims?
Services
In addition to determining the types of coverage you might need and policy limits for incidents, the level of service a carrier provides can make a world of difference, especially in the unfortunate event of a loss. When a broker recommends a carrier, ask questions that probe how the specific services that carrier offers are different from the other carriers on the market.
- What kind of wildfire defense services do carriers offer before, during, and after a wildfire?
- Does the carrier provide identity monitoring services? Which carriers help with cyber resiliency planning?
- How extensive is the carrier vendor network? Do they guarantee the work of their approved vendors?
- Does the carrier offer Property Manager Services? In all States?
- Does the carrier offer Security Services? Is the service included with the premium or offered at a discount?
- What type of Fine Art Experts are available with the carrier? Will they help us with valuations? Transport? Creating a fine art evacuation plan?
- What other experts do they have on the team to help our family?
Financial Motivations
Many insurance brokers will automatically tell you that you need insurance, but that does not always align with your risk tolerance or circumstances. Remember, they only get paid when they sell a policy. Not all insurance agents sell policies for the sake of earning a commission and many do provide their clients sound advice backed by claims data. It’s still important to be sure ask questions to ensure that financial motives aren’t tainting the advice a broker gives you.
- How is the firm compensated by insurance companies?
- Is there a commission structure for the firm with the recommended carrier?
- Does the firm receive any additional compensation from the carrier when you hit certain growth and new business benchmarks?
- How is the team working on my account compensated?
- What is the commission the firm will earn with each policy placed? Is there a commission difference between an admitted solution and non-admitted solution?
- Are there additional financial incentives in place with the recommended carrier such as marketing resources, event sponsorships, educational events, or educational programs?
If you’re weighing your options when it comes to insurance and determining which combination of risk transfer and risk retention strategies works best to protect your reputation and assets, working with a team of experts with a proven track record in understanding and managing different lines of coverage can make a big difference when it comes time to use your insurance policy. Furthermore, delving into how financial motivators might play into the advice you’re receiving can impact whether you’re getting the best policy and coverage available on the market for your circumstances.
Consider partnering with an expert who does not receive monetary compensation for insurance placements. Atténuer Risk can provide objective, client-aligned risk management solutions, and this includes non-insurance options.
Contact our team today to learn how we can work together to protect your lifestyle.
