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Are You Guilty of Presumptions?

Posted By Curt Pearsall, CPCU, AIAF, CPIA, Tuesday, April 3, 2018

Very honestly, I believe that more insurance agency folks are than they realize.

What is the “presumption” that I am referring to? This is where you (the agency staff) believe that you know what coverages the client needs or what limits are appropriate. For example, let’s presume that your client (personal or commercial) has a $5mil umbrella. At renewal time, are you providing them with options for higher limits or does your proposal state “higher limits may be available”? Or are you presuming that $5mil is more than sufficient for this client?

Over the years, I have had agency staff make comments such as the following:

  • “I didn’t offer them an umbrella – I didn’t think they could afford it”.
    “the client asked me if $5mil was enough and I advised them that $5mil was more than most clients carry”.
  • “the client told me that they were told they should have higher limits. I advised them that they were good with what they had”.
  • All the above deal with umbrella but the same could be said for virtually any line of business, personal or commercial.

Are you guilty of presuming? When you presume, you are essentially telling the client that you know them as well as they know themselves. When a loss occurs and the loss is not fully or even partially covered, the client is going to be coming after you for “poor advice”. The truth is that they will probably have a case against you based on your verbal or written comments.

It is important to remember that agents can be held accountable for what they say and what they put in writing. So, if you (for example) don’t provide contents coverage for a client’s vacation home (this is a true story) because you don’t think they would buy it and they have a loss and there is no contents coverage, your agency may not have much of a defense.

The appropriate “best practices approach” is to offer the coverage / higher limit options and let the client decide. I call this “customer accountability” and this should be an objective of every agency.

Everyone knows what happens when you “assume”. Well, I can tell you that “presuming” is not much better.

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