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The Rough Notes Company Inc.



November 23
15:03 2021

Coverage Concerns



From personal inland marine and water claims to cyber exposures


Encourage your clients to keep their valuables safe. This includes their homes, their autos, their possessions, and their families.

By Marc McNulty, CIC, CRM

Those of us who spend our time in the agency side of the industry are tasked with providing proper insurance coverage for our clients. This, of course, is based upon the exposures they reveal to us.

If an account doesn’t advise us that they have jewelry or artwork that needs additional coverage other than what is built into the homeowners policy product(s) we are quoting them, we don’t know to add the appropriate inland marine coverage.

The same can be said if a client finishes their previously unfinished basement, builds an addition onto their house, or adds a swimming pool. There are an infinite number of exposures that can be hidden from us, either by accident or with the direct knowledge of your insured.

In addition to keeping up to speed on the latest coverage offerings from the carriers we represent—and offering that information to our clients—agents should also take the time to educate their customer base on steps they can take to eliminate coverage gaps (or even potential claims altogether).

Personal inland marine. The May 2021 edition of “Mind the Gap” focused on personal inland marine coverage, and one of the items we touched on was agreed value. Having agreed value on my own inland marine coverage provides me with peace of mind, but I soon learned that my limits of insurance were completely inadequate.

The closing comments of the May 2021 piece stated that you should encourage your clients to keep appraisals up to date, so I recently took my own advice and had my wife’s wedding set and anniversary ring re-appraised. I was shocked to learn that the wedding set replacement value was now 46% higher than my last appraisal and the anniversary band had a replacement value that was 63% higher than when I purchased it four years ago!

If there is that big of a value difference with a jewelry item that is only four years old, you can imagine the potential gap in coverage for your clients who may be relying on appraisals that are five to 10 years old (or even older). The price of precious metals has increased significantly over the past five years, so encourage your clients to obtain updated appraisals so that their limits of insurance are sufficient. An agreed value check isn’t going to make your client happy if it covers only 40% of the item that was damaged or lost.

Water claims. If your clients can significantly eliminate the possibility of a severe loss, would they? It’s not unreasonable to think that most of them would.

This is why insurance companies offer discounts for various preventative devices and services, including water shutoff systems.

If you’ve been in the industry long enough, you’ve most likely seen at least one large water-related loss. The largest one I can recall involved a client being out of town for a week and when they got home, they discovered a pipe had burst in their finished basement. The total payout exceeded $160,000.

The good news is that water shutoff systems are now widely available and can be purchased for a reasonable cost. There are a variety of options available in the market, including highly rated models that sell for under $1,000 and have smartphone integration. These types of systems detect irregularities in a home’s water flow rates and will shut off the water supply when a problem is detected.

Educating your clients on these types of systems can mean the difference between them paying their deductible and having a claim on their loss history … or paying the same amount (or potentially less) to greatly lessen the chances of a water-related loss from occurring in the first place.

Cyber exposures. If you’re like me, you’re tired of hearing about ransomware, data breaches, and the need for cyber insurance. But, like COVID-19, cyber threats are a fact of life, so we need to deal with them and continue to educate our clients about this evolving danger.

A relatively simple way for your clients to decrease their vulnerability to cyberattacks is for them to implement multi-factor authentication (MFA). Most data breaches involve stolen or weak passwords and MFA can assist with eliminating this issue.

In the off chance you aren’t familiar with MFA, it is the use of two or more authentication methods to verify the identity of someone attempting to access a computer system or website. The authentication process uses factors that fall into at least two of the three MFA categories, which are knowledge, possession, and biometric.

If you’ve been in the industry long enough, you’ve most likely seen at least one large water-related loss.

Knowledge factors include passwords, PINs, or answers to security questions that only the user knows, whereas possession factors apply to something the user has. This includes their smartphone or a smart card.

Obviously, biometric factors pertain to physical characteristics of the user, for example a fingerprint.

The implementation of MFA needs to be well thought out, as your commercial lines clients may have a variety of devices that need to be protected. However, this will be time well spent by your clients, as this could prevent them from suffering a devastating cyberattack.

Educating your clients on this now will help to keep them ahead of the curve, as some insurance companies are beginning to require that MFA be in place for cyber coverage to be purchased. If this proves to be an effective underwriting tool to keep loss ratios down, you can expect other carriers to follow suit. If you’ve been in the industry long enough, you’ve most likely seen at least one large water-related loss.

Using common sense. I’ve heard on multiple occasions over the years that insurance policies don’t exclude stupidity. While this is certainly true in many cases, there are definitely policy exclusions that counter this statement (such as the racing exclusion in the personal auto policy).

However, there are also plenty of situations that validate this statement. For example, several neighborhoods in our area were posting information pertaining to auto thefts that were taking place in broad daylight. The information that was shared via social media included articles from local news stations, posts from residents, and even video doorbell footage of two teenagers breaking into cars and stealing the contents in them.

Residents were alarmed, and rightfully so.

While this situation is undoubtedly scary, as no one wants to face an intruder or burglar at their home, I discovered that many of the documented situations had one thing in common—the cars in question had been left unlocked and key fobs were left in several of them. While I personally didn’t see the video, I had a client inform me that in one instance a home-owner had left his wallet along with the key fob in an unlocked vehicle parked in his driveway. The wallet and other contents from the vehicle were stolen during a late afternoon in the middle of the week—not during the middle of the night as one might expect.

By no means am I casting stones, as I’ve certainly done my fair share of dumb things over the years, but locks were put in cars and in homes for a reason—to keep unwanted people out of them.

Encourage your clients to keep their valuables safe. This includes their homes, their autos, their possessions, and their families. Whether this means using locks on doors or nets on trampolines, your clients should be reminded to exercise caution whenever they can.

Not only will this help to keep their insurance premiums down in the long run, it should help them to sleep better at night.


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. To reach Marc, email him at



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Rough Notes Editor

Rough Notes Editor

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