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January 14, 2011 / Brett Cohrs

What Coverages Do I Need? (Part 1)

I get asked this question often. As an insurance agent who started higher education as an English Major and finished with a Master of Divinity (that would from a seminary, not a degree on how to use a Ouija board), I’m super sensitive to being perceived as a salesman.

So when I hear the question ‘What coverages do I need?’  red flags go up: How can I tell them the truth without them thinking I’m trying to super-size their value meal? (in case that metaphor is too vague: I never want a client to think I’m selling them something they don’t need.

Here, then (and the next couple posts), is where I will answer the question in a generalized fashion. Your situation is unique–talk to a pro.

‘What Coverages Do I Need’: Code for ‘What Kind of Claim Am I Going to Have?’

The question truly hinges on the word ‘need’.  If by ‘need’ you mean, ‘What kind of claim am I going to have?’, then I can’t help you. Insurance agents aren’t prophets. I’m not, despite my education, a diviner: I cannot predict from whence a claim might come; nor can I predict whether you’ll ever have a claim.

All we can do is propose policies that protect the stuff you own and protect your liability exposures because of the stuff you do.

Instead of looking at likelihood of a claim, we lay your stuff out on a table (figuratively speaking) and try to play a matching game: which coverages match up with which exposures. For instance, how likely is it your house is going to burn down? Not very. Still, you want to protect that ‘stuff’, so you purchase a homeowner’s policy.

Likewise, if you work with youth, how likely is it that you or one of your volunteers or employees will sexually molest one of the youth you serve? Not very.  Still, the exposure and possibility for a a valid or drummed up lawsuit is always there. Consequently, we suggest you purchase a policy that addresses this possibility.

Need isn’t about likelihood of a bad event; it’s about focusing on the things you will still need after a bad thing happens (i.e. your building, money to pay employees, funds to pay damages, etc).

Some Examples:

If you provide any advice, counseling, or miscellaneous social services, you should find the appropriate professional liability policy.

If you own or only drive ANY vehicles–ever, you should match up your autos with an auto policy (at least a hired/nonowned auto policy).

If you have volunteers who do labor for you, you should match that exposure with a volunteer accident policy (in lieu of workers’ compensation which only applies to employees–normally).

If you do overseas work, you should investigate repatriation coverage.

If you are a foundation and are entrusted with funds, then you should make sure you have an employee dishonesty policy and directors and officers policy.

If you do a lot of work on the internet or have confidential information on hand, you might want to look into a cyber liability to address those risks.

Get the picture? An insurance agent’s job is not to predict, but to put little umbrellas of coverage over as many exposures as possible.  The predicting and riverboat gambling piece is up to you.

I look forward to answering this question more fully in coming posts.

As always, I’d love to know what your insurance questions and concerns are, if only to assist in what questions YOU need to ask of your insurance professional.

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