- 676
I will still write 15/30. Just have them sign off on it.
Lower Limits On Auto
- Thread starter nyc2phi
- Start date
- 1,581
^ Heck yeah. You can lead a bum to the water BUT you can't force him to drink it.
15/30 all day to the bums who've been fully educated on the matter & still couldn't care less & are willing to slap their signature on the paper.
A few states might mandate that you accept all comers at the limits they want. Most don't. Many agencies have "minimum limits" standards where they won't, for example, place any personal auto coverage with limits less than 100/300/100. They turn away all of the 25/50/10 minimum limits price shoppers and significantly reduce their E&O exposure.
According to one study, 14% of E&O claims from auto accounts involve inadequate limits because policies are often written at minimum limits. With homeowners, 12% of E&O claims are due to inadequate limits, slightly less than auto because the minimum liability limit on an HO policy is typically $100,000. Move to CGL policies in commercial lines where the liability limit is typically $1M and the E&O claims due to inadequate limits drops to 4% even though average claims are far higher than auto or homeowners. Proof positive that the higher the limits you sell, the far less likely you are to be sued and the far less likely your customer is to have an inadequately covered liability claim. Sell those personal umbrellas!
According to one study, 14% of E&O claims from auto accounts involve inadequate limits because policies are often written at minimum limits. With homeowners, 12% of E&O claims are due to inadequate limits, slightly less than auto because the minimum liability limit on an HO policy is typically $100,000. Move to CGL policies in commercial lines where the liability limit is typically $1M and the E&O claims due to inadequate limits drops to 4% even though average claims are far higher than auto or homeowners. Proof positive that the higher the limits you sell, the far less likely you are to be sued and the far less likely your customer is to have an inadequately covered liability claim. Sell those personal umbrellas!
- 1,016
I'm surprised it isn't higher than that. agents must be getting better at obtaining and retaining those signed waivers.
JenkinsAgency
Expert
- 41
I have refused lots of people who walked in demanding state minimum coverage (30/60/25 here in TX). If someone is either too stubborn or too stupid to decide for themselves that higher limits are the way to go, I politely decline to write the business, and refer them to one of my independent colleagues who will write anyone with a pulse.
People like that are almost always a royal pain to deal with in lots of other ways.
People like that are almost always a royal pain to deal with in lots of other ways.
Dan, that's experience from our members. There are many nonstandard auto agencies still out there who write minimum limits and probably make more money on financing than commissions. And there is a lot of auto business written direct and online that wouldn't be in that number...much of that too is minimum limits business. So I suspect you're right...when you look at the entire marketplace, the percentage of claims due to inadequate limits is much higher.
- Thread starter
- #17
I appreciate all the feed back.
For me the lower limits thing is not so much for E&O protection but more so to try to avoid a servicing nightmare.
Where my office is in Philly, 15/30/5 clients are always in and out cancelation, always calling to see the price if the were to buy a new car (they never buy it), always filing a claim, etc.
By weeding those people out I avoid some of these problems. Unfortunately at times we still rate well with 50/100 on a 15/30 client and that point it really comes down to the other underwriting questions.
For me the lower limits thing is not so much for E&O protection but more so to try to avoid a servicing nightmare.
Where my office is in Philly, 15/30/5 clients are always in and out cancelation, always calling to see the price if the were to buy a new car (they never buy it), always filing a claim, etc.
By weeding those people out I avoid some of these problems. Unfortunately at times we still rate well with 50/100 on a 15/30 client and that point it really comes down to the other underwriting questions.
- 1,581
^suggesting your Indy colleague writes anythjng with a pulse aka you're better as a captive? Sounds like we got a newbie captive clown (prob farmers or Allstate..)
Blinded by the light & surely a douche..
- 977
Bumping from state minimums up to 50/100 is rarely a premium increase even worth mentioning. A dollar or two per month isn't going to kill your sale...if it is, it's not a sale worth fighting for, no? In these cases I tell the client that the insurance company rewards the insured with better rates for higher limits than for state minimums, so they'll actually be paying less...which isn't a lie, it's true from a certain perspective. In terms of cost to coverage ratio, it's typically a MUCH lower figure. Actually, when I was with Nationwide, the premium was typically a few dollars lower per 6 months for 100/300 vs. 50/100, so it was actually entirely true. I'm hoping I see the same thing happen with Allied.
Back in the 90s, several insurers send flyers with auto renewal notices, suggesting that the insured consider reducing UM limits from 100/300/50 to 25/50/10 to save money. An agent sent me an example from a large national carrier and the amount of savings was $9.51. Agents put a stop to this practice quickly...none wanted THEIR customers to be given such bad advice.
Higher liability limits can be very cheap. I bought a 90hp pontoon boat a couple of years ago? The cost to extend $2M in umbrella coverage? $7. No doubt it cost more to add the coverage than the premium, much less the agency commission.
Higher liability limits can be very cheap. I bought a 90hp pontoon boat a couple of years ago? The cost to extend $2M in umbrella coverage? $7. No doubt it cost more to add the coverage than the premium, much less the agency commission.
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