I was recently speaking with a good friend regarding a variety of insurance coverage issues and I asked her if she had an umbrella. She said that she had asked her agent that question and the response from her agent (a direct writer) was that “she didn’t need an umbrella since she really did not have any significant assets to speak of”. There were a couple of things that struck me as “wrong” regarding that conversation….never mind the agent turning down the sale of a coverage that would help someone to better protect themselves.
One is the “perception” / “opinion” that the agent communicated that sounded like he knew completely the assets of this customer. Isn’t there the possibility that the customer could have assets that the agent was not aware of? Most definitely!
The second issue deals with how much of an issue one’s personal assets are in determining the need for an umbrella. In one of my recent classes, one of the attendees spoke of a situation that they were aware of for the benefit of the class. The real life scenario involved a young man that just graduated from college. Due to the cost of college, this young man was in debt to the tune of roughly $200,000. So what was his net worth….probably a negative number. This individual was involved in a very bad car accident where the other party suffered some significant injuries. The young man was found responsible but unfortunately did not have sufficient insurance to cover the amount of the judgment against him. In fact, he was $500,000 short. As the story was told, this young man is now going to have his wages garnished for as many years are necessary to pay for this $500,000 short fall.
What difference would an umbrella have made…a lot!
If one applies the “net worth formula” to determine whether a customer needs an umbrella, I believe that they are looking out at this the wrong way. Personally, I believe that everyone needs an umbrella. For anyone with a car, it is not difficult to imagine a claim scenario where the underlying limits will not be sufficient and an umbrella could ”save the day”. Is the amount of a loss that a customer can cause determined by the amount of their personal assets? I am confident that you know the answer to that question.
Don’t prejudge your customers or draw a perception that they really don’t need an umbrella…offer it and you just might yourself providing an additional level of protection for your customers. If they don’t buy it, that is their decision but you are at least allowing them to make the decision.