Take continuing education seriously
For those of us who are agents, the evolution of exposures—and
in many cases corresponding coverage forms—is why continuing education is so crucial.
By Marc McNulty, CIC, CRM
If you’re new to the insurance industry, one of the things you’ll soon learn is that the industry is always evolving (although not always at the pace of the rest of the world). This is certainly one of the many appeals of our profession, along with the variety of career options that are available.
For those of us who are agents, the evolution of exposures—and in many cases corresponding coverage forms—is why continuing education is so crucial. Coverage for social engineering, utility service lines, and cyber exposures were just twinkles in our insurance forefathers’ eyes decades ago … but now they are written daily and should be offered on most accounts.
This brings us to a couple of critical questions: What coverages should be regularly offered on your accounts? And what procedures should be used when writing a piece of business?
While no two accounts are the same, it is important that new producers adopt standards that are utilized within their agencies (or even assist with setting standards if none are in place). This will help to protect their clients and their own E&O, and will also assist with growing their books.
Education is key
As others have written in Rough Notes before, a variety of organizations offer professional designations and continuing education in conjunction with those designations. I’ve personally found that the Risk & Insurance Education Alliance offers quality programs for those who are in the sales and service side of the insurance industry. The instructors bring to life insurance coverage concepts with relevant case studies and stories from their own experience. This helps to illustrate how limits and coverage that were once considered to be sufficient may not be in today’s world.
One such instructor—Allen Messer, CIC, CPCU—offers an excellent James K. Ruble course for those who are updating their CIC or CRM designations. The course, Agency Coverage Standards, dives into various procedures and coverages that every agency (and agent) should consider as non-optional. With his permission, I will share some highlights from the course that I believe are beneficial to new agents.
Standard procedures
It’s all too easy for new producers to focus on the sale and not the minutia that can potentially cause issues in what may seem to be a solid insurance proposal. Are you using a formal method for exposure identification? Are you using established coverage standards that include minimum acceptable liability limits? Do you know which endorsements should always be quoted—along with which ones to avoid? These are significant questions that may allow you to truly differentiate your proposed insurance program from a competitor’s.
Similarly, is the first named insured correct on your proposal and are all additional named insureds appropriately included? How about copies of vehicle registrations—do you know with certainty to whom each vehicle is titled when quoting a fleet?
Using various techniques to properly identify exposures may help you to conduct deeper conversations with prospects and clients and will allow you to present yourself as a true professional who does more than copy, quote, and pray. While your prospective buyers might not elect to purchase everything you propose, you’ll sleep better at night knowing you at least gave them the option.
Endorsements to offer or modify
Messer presents a comprehensive list of endorsements that should be offered in conjunction with various lines of coverage, but I would like to highlight a few that may not be as well-known. For example, certificate requests containing additional insured language are commonplace for contractors, and automatic additional insured endorsements are available (typically when in a written contract or agreement).
However, what about contractors who lease equipment from another party? The CG 20 34 (Additional Insured – Lessor of Leased Equipment – Automatic Status When Required In Lease Agreement With You) is a great way to offer similar automatic coverage for this type of exposure.
Speaking of leased property, consider adding the CP 14 60 (Leased Property) form to your commercial property accounts and—if the underwriter allows you to—list “all leased property” under the Description of Property section and “as required by written lease” under the Agreed Value section of the endorsement. This endorsement will then allow you to cover property of others in your care, custody or control as business personal property when such property is part of a written lease agreement.
While this endorsement broadens coverage for your insureds, others such as the CG 21 44 (Limitation of Coverage to Designated Premises, Project or Operation) can severely limit coverage, because the form lists specific premises and projects or operations to which coverage will be restricted. Check to see if you can broaden the description of premises or, if needed, broaden the project or operation schedule to state that “operations that are necessary or incidental to the insured.”
While we’re on the topic of operations that are necessary to the insured, what if you have a prospect who employs salespeople who occasionally travel for business and rent cars? You’re probably thinking “as long as I have hired and non-owned auto coverage, I’m good to go,” right?
Are the salespeople renting vehicles in the name of the business every time they travel? Probably not, which is why you should add the CA 20 54 (Employee Hired Autos) onto your client’s commercial auto policy. This provides coverage when an employee rents an auto in their own name with the permission of the insured and while performing duties of the insured’s business.
Finally, equipment breakdown and agreed value should be offered as much as possible, as these will broaden covered property perils and will eliminate coinsurance headaches at the time of a loss.
Endorsements to avoid
If you do want a potential headache at the time of a loss, then leave the CP 10 36 (Limitations on Coverage for Roof Surfacing) on any of your accounts that have heavy property exposures. This endorsement can change the value of roof surfacing from replacement cost to actual cash value and can also exclude coverage for cosmetic damage to roof surfacing when caused by wind and/or hail. Try to have it removed if possible.
Similarly, do your best to avoid the CP 04 11 (Protective Safeguards) and CP 12 11 (Burglary and Robbery Protective Safeguards) endorsements, which will require your client to comply with various safeguards or else risk an exclusion of covered property.
Another form you should avoid is the CG 21 49 (Total Pollution Exclusion Endorsement). Instead, look to replace it with the CG 21 55 (Total Pollution Exclusion With A Hostile Fire Exception) or the CG 21 65, which gives back coverage not only for hostile fires, but provides a carve-back for building heating, cooling and dehumidifying equipment.
What about limits? And where does it end?
Don’t forget about standards regarding liability limits, especially on your personal lines accounts. The days of 100/300/100 limits being considered adequate are long gone, and don’t bother quoting state minimum limits because you’re just asking for trouble. Quote increased personal liability limits (at least $500,000) and look to add umbrellas as much as possible.
While the process to adopt standard procedures and coverage standards may seem daunting, consider the issues you can potentially avoid by spending a little extra time to properly identify exposures and then properly address them through coverage solutions that your prospect may not even know about.
As we noted earlier, education is key, so do yourself and your clients a favor and take your continuing education seriously. You might just learn something that can help you improve your agency standards, win you a piece of business, or prevent an E&O claim! n
The author
Marc McNulty, CIC, CRM, is a principal at The Uhl Agency in Dayton, Ohio, and has been with the agency since 2001. He divides his time among sales, marketing, technology and operational duties. You can reach Marc at marcmcnulty@uhlagency.com.
