OVER INSURED?

[playball41]

Something has been on my mind been running across policies that people are paying on $250,000/ $500/000 coverages and these people I think are over insured. Here's why I say this. Someone making $50,000 a with maybe $80,000 in assets (mainly the home) and maybe $50-$75,000 in a 401k and no life insurance I don't think needs to be insured that high. I would like to recommend lower coverage amounts to help pay for life insurance to cover the mortgage and final expenses. Wonder if it is ever legit to lower the limits if i feel they are uninsured? Thought? comments? What about E&o issues?

 

[fed up]

Net worth has little to do with liability coverage on an auto policy unless you are looking to cover complete assets. The difference in premium between 50/100 coverage and 250/500 is peanuts compared with the difference in collision deductibles. I would never advise for someone to lower their liability and expose them to financial ruin because they happened to hit a van full of seniors headed to church on a Sunday morning just to save $30 in premium for a term. In your example you have a person with over 150K in assets placed at risk because you want to sell an additional life policy which benefits YOU. 3 days in a hospital after a motorcycle accident was in the 40K range and I wasn't hurt. Lower their liability and you have opened the door for an E&O exposure because the customer trusts you for the best advice and they will never remember that you advised on the difference in coverage

 

[mplsmm]

A younger guy went around a school bus one stop over from my kids and hit several kids that were crossing the street. He had minimal coverage. His coverage didn't even cover the helicopter and ambulances to get to a hospital. Two of the kids needed months of hospitalization. There were a lot of go fundmes and spaghetti fundraisers. Who should absorb that? The hospitals, the community? Not all the parents had health insurance. Obviously it's an isolated incident, but it happens often enough that most of us agents have stories. I have several of my own. I dont sell minimums or low coverages, I have to sleep at night. Let the 800 numbers handle it. And besides, people are just saving a few bucks when they do that. It's not about protecting assets, it's about being a decent human that might make a mistake while driving and not expecting others to rely on a fundraisers and handouts to pay for what you caused.

 

[fed up]

Just for giggles I looked at a proposal I am working on. 3 vehicles, 3 drivers.
500/500/100 4634/term
100/300/100 4348/term
For $50 per month, or $10 per week is this man overinsured? When his assets are not attached to a Claim I am willing to bet that he would not feel that the extra $10 was a waste. Sell people real insurance, let the general have his own army

 

[playball41]

Well thanks for the input all totally makes sense

 

[Markthebroker]

I dont sell minimums or low coverages, I have to sleep at night. Let the 800 numbers handle it.

Well said.

 

[Allen Trent]

Never skimp on liability or uninsured/underinsured. You cant pre-determine who or how many they might injure or kill. 1 client could injure an unemployed single man. The next client could hit a car with a neuro surgeon.

Instead, increase comp & collision deductibles or eliminate comp and collision. Even if a car is worth 5 or 10k, almost all of us could recover from totaling out a car. That way, you are trading premium to cover a small risk like Comp & collision instead of trading a risk that they might be sued for $1m and have their future wages garnished to cover the shortfall. IE: self insure the small stuff & transfer the big risks to the insurance carriers. Plus, the insurance carriers high priced legal defense will be a ton more diligent in defending the client when there is $1m policy compared to 100k

 

[AZDave]

When I was selling auto, home and life insurance as a captive, I would turn those auto limits into a life sale. "I see that you this insurance company ready and willing to pay $500,000 to someone else that dies from an accident. What do you have for coverage if that person is you? Why are you willing to pay more to someone else that you dont even know, then to your own family?"

 

[Markthebroker]

When I was selling auto, home and life insurance as a captive, I would turn those auto limits into a life sale. "I see that you this insurance company ready and willing to pay $500,000 to someone else that dies from an accident. What do you have for coverage if that person is you? Why are you willing to pay more to someone else that you dont even know, then to your own family?"

That's a good pitch. I could see phrased slightly one way and be very salesy and even condescending.

I could see it pitched ever so slightly a different way and be very sincere, compassionate, and effective.

 

[AZDave]

Right? It's just such an easy transition into asking about life insurance. Even if it's just a quick ask. Your already talking about the auto limits, and how $500k would get paid pretty quickly to a dead person's family.