As insurance agents, you deal with prospects who either understand the need for coverage or who underestimate it. People who understand the need for insurance call you, looking for rates. As for those who underestimate coverage, when you pitch insurance to them, the conversation sometimes ends with a simple "No thanks, I'm good!"
So what do you say? What's the best approach to somebody who doesn't quite grasp the critical need for the right coverage? Here are five things that I, an attorney who specializes in personal injuries, would say to your clients.
1. Anyone who has ever had insurance has never regretted having insurance but anyone who hasn't had it and has needed it ... oh boy, do they regret it.
If you go through the first 40 years of your life as a driver without ever being in an accident, you likely won't say, "Man, I sure do regret having had auto insurance all that time!" A person who goes through their whole life without ever being in a car wreck or even a fender bender will likely look back and be grateful at the fact.
But what if that person were in a car accident? What's worse - what if they were in a car accident where they were not only at fault, but the other party was severely injured? Can you imagine how grateful they would be at the fact that they were insured? The same applies to having the right amount of property/casualty insurance.
Remind your clients that the only regret they should be concerned about is the regret of not being insured. And, ultimately, it comes down to numbers. Let's say that the average homeowners insurance policy costs about $1,300 per year (Bankrate.com states that the average home insurance policy with $250,000 in dwelling coverage costs an average of $1,383 per year in the U.S.).
Let's assume that it's $2,000 per year with personal liability insurance included. That's about $166 a month. Meanwhile, we represented a woman who was attacked and injured by a dog and managed to help her get compensation for $600,000. Let's run the regrets exercise one more time. Who hurts the most? The person who paid $166 a month for peace of mind and never had to use it? Or the person whose best friend decided to bite a neighbor and was, consequently, taken to court for it?
2. The best offense isn't always a good defense.
And I'm not talking about Bill Russell's 1963 Boston Celtics who were, by most accounts, the greatest defensive team in the history of basketball. I'm talking about liability when someone is injured on your property and you are being held liable by them. Defense is, in these situations, a last resort. Why? Because the best offense against such risks is having the proper insurance.
Now, full disclosure, I am not a defense attorney. I work on the other side of a personal injury case alongside the aggrieved or injured party. However, I know that defense attorneys love nothing more than clients who don't have proper coverage (assuming they can afford it). And this is especially true when the client has assets to lose.
Ever heard the expression "I'm coming for your house and car" in a movie or on television? Well, you won't just hear it in divorce court. Your assets are always at risk when you don't have proper insurance and someone is injured on your property. That means that the defending party is going to pay and fight as much as possible to not lose those assets. Which, in turn, means that a defense attorney is going to bill more hours.
The average defense attorney in California, for example, bills around $300-$400 per hour. The average length of a personal injury case where your clients are not insured varies from case to case. However, it can last about two years. And that's if the case doesn't go to trial (which about 30% of cases do). A conservative estimate for a case that went on that long could be as high as $240,000 in defense attorney fees.
But that's not all. Those are just your clients' fees. That doesn't account for the compensation awarded to the plaintiff. This means, essentially, that even if you win the suit, you still lose if you don't have the right insurance. And if you lose the suit, you lose big.
3. Talk, talk and talk with your insurance agent to understand what is and what isn't covered.
Another common thing I see is a person who thought they were covered for one thing but were, in the end, not covered for it. This happens in all types of insurance. Drivers who think they have roadside assistance. The family of a deceased person who learns, the hard way, that a certain type of death wasn't covered by their loved one’s life insurance policy. And, yes, homeowners who realize too late that they're being held liable for an injury that happened on their property.
These are unfortunate outcomes that happen because of not enough communication between an agent and the insured. Everyone stands to lose when there isn't proper coverage. It's not unheard of that a defendant simply doesn't have the money or assets to pay a judgment against them. If the defendant isn't covered and the plaintiff doesn't have their own insurance to cover their bills, then it's possible that they, too, will be liable for their own bills.
The best advice I can give to one of your clients is to talk to you as thoroughly as possible regarding their claims. And to you, as insurance agents, I encourage you to remind of the risks and liability that clients are exposed to without the proper coverage. Because all it takes is one event to turn their life upside down.
4. A good insurance policy turns a doomsday into just another Monday.
A great insurance policy turns a doomsday event into just another Monday for the insurance carrier. This is only true, however, if the coverage was sufficient. That's where you come in. As attorneys, we have a lot in common with insurance agents. We both:
Want to make sure that our clients are properly compensated if needed.
If a claim (or case in our field) pops up, we want our clients to win.
The worst thing in your life can cost you tens of thousands (if not hundreds of thousands) of dollars. But the right policy will turn the same event into a 10-minute phone call.
The stress that comes from losing thousands where you could have otherwise only paid a couple of hundred dollars is simply not worth it. As I said earlier, these cases can drag on. The bills pile up. And life doesn't slow down. Peace of mind is an asset. And the absence of it is worth far more than a few hundred dollars.
5. Proper coverage means everyone is happy.
The truth of the matter is that some agents love selling bare bones, limited liability coverage just as much as some people love buying it. But ultimately, if tragedy were to strike, no one would be happy.
Speaking to both agents and their clients, the rule of thumb is to consider liability. Negligence generally is proven in court by four key factors: duty, breach, causation and damages. In some states, for example, malpractice by an insurance agent comes down to these simple steps:
You, as an agent, owed a duty to the client.
You failed to perform that duty and are in breach.
You are held liable as the cause of the damage.
Therefore, a faster sale isn't always the best thing. And the same goes for clients when it comes to cost. If your clients disregard your sound advice, that liability is on them and not you. There is only so much an agent can do.
Dear everyone, talk to an attorney!
I'll close out by giving this last piece of advice to everyone: Talk to an attorney!
Encourage your clients to speak to an attorney who works with personal injury cases. Many will do so for free and build a relationship that may result in a service in the future. But agents should reach out too. You can learn so much by understanding what the cases look like from the other side of the table.
It often seems that our clients believe we're only focused on our returns. As agents, you have the same challenge. A big part of the services we offer to our clients start with being informed and establishing trust. Transparency, preparation and a sincere desire to do what's best for our clients goes a long way.
Greg Kirakosian is a personal injury lawyer and founder of Kirakosian Law in Los Angeles. Greg may be contacted at [email protected]