When we’re deciding between two similar items, it is wise to compare their costs and benefits side by side to make the best choice. Unfortunately, some people falsify information or misrepresent their product or service to make it look or sound better than the other. I think we’ve all purchased services or items that weren’t what they initially appeared.
Regrettably, this is also true in the world of insurance. Some insurance agents may use tactics in an effort to block their competition, protect their own interest or paint a false picture. Below are some tactics you should be aware of as well as some guidelines to follow to ensure that you remain in control of your insurance program.
Delaying the Renewal Quote: Agents may wait until the last minute to present the renewal quotes to their clients to reduce the chance they will have the time to search and obtain other quotes from different agents. Protect yourself by knowing when your policy is up for renewal. Set a reminder on your calendar to begin the process of soliciting quotes 90-120 days in advance.
Changing Exposures: An agent can change or reduce the exposures that are used to determine the premium for certain coverage such as General Liability and Workers Compensation. This may involve adjusting the actual sales figures, payrolls and Experience MOD in order to make the premiums appear lower. Beware, this will catch up to you once the carrier issues the policy or during the annual audit. Adjusting these exposures can impact your ability to accurately compare quotes and possibly lead you to make the wrong choice. To prevent this, ensure all quotes are using the same figures for their rating basis. Request to see the actual carrier’s quote which is the only true indication. This can be your verification document.
Falsifying the Proposal: This strategy involves entering incorrect or extra coverages in the sales proposal that are different from the official insurance policy/quote. Since proposals are created by the agents, they often only contain what the agent desires to include. They do not include the policy limitations, exclusions or conditions that can impact a claim and coverage. These documents should not be viewed as binding or legal contracts as they do not provide any coverage and are only intended to be a summary of the actual quote. It is highly recommended to view the actual quote from the carrier to ensure you are getting what you need and expect.
Excluding Critical Coverage: Your agent may intentionally omit needed coverages or endorsements from the quote and have it endorsed after the policy is sold. This would keep the premium lower at presentation time, but result in a large increase when you receive your invoices. It can also create a coverage gap issue or denied claims if forgotten or not added in a timely manner. This is not as easy to identify due to some insureds not knowing what to look at. Some common endorsements to consider are Blanket Additional Insured, Waiver of Subrogation, Primary Non Contributory, Manufacturer’s Selling Price, just to name a few. To help ensure you have the coverage you need, read your entire policy and get a second opinion,
Blocking Markets: Your agent may block soliciting quotes from many carriers to prevent other agents from providing quotes. To prevent this, you should limit the number of carriers each agent is able to use. This will increase your chances of obtaining quotes from multiple carriers.
Dropping Prices Afterwards: Another tactic some agents use is waiting to see IF you receive better quotes from other agents before reducing their renewal pricing. Be sure you are working with an agent who has a strategy outlined in advance to control the cost of insurance. Your agent should be proactively working to reduce your premiums with our without another agent’s involvement and have the process outlined with you ahead of time.
Failing to Deliver Policies: Many agents will not provide the policy to the insured in advance. They may only supply the declaration pages and basic information. This is often done in an effort to make it harder for the insured to share their policy information with other agents to obtain comparable quotes. Protect yourself by insisting to see the entire policy, including the coverage forms, endorsements and conditions to be sure you’re making the right decision before a non-covered claim occurs. The declaration pages are not what determines if you have coverage.
Selecting an insurance agent is a serious decision. It should not only be based on price, but also the agent’s level of knowledge, expertise, honesty, and integrity. If you notice any of these tactics being attempted, it may be time to find someone you can trust as the actions outlined above show the agent is more interested in protecting their own income than providing the proper coverage for your business. Remember, there is nothing wrong with asking questions, closely reviewing carrier quotes, and taking the time to understand your agent’s expertise to ensure your business is properly covered.
As the saying goes, insurance is like a parachute, if it doesn’t work right the first time you may not get a second chance. If it is time to review your policies or find a trusted agent to benchmark where you currently stand, please consider contacting me at 610.966.1315 for a no obligation discussion.
Insurance products offered through Univest Insurance, Inc. are obligations of the issuing insurance companies, not obligations or deposits of or guaranteed by any bank and are not insured by the FDIC or any other agency of the United States.