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Customer Service Focus Be a service pro to reduce unpleasant surprises Start by asking well-chosen questions By Carol Middlekauff, CIC, ARM
Surprise! Followed by a chorus of “Happy Birthday” or “For He’s a Jolly Good Fellow,” this word brings a big smile to your face. On the other hand, if the surprise comes from the words “I’m sorry, you’re not covered,” it brings the opposite response. Many unhappily surprised insureds thought they had complete coverage for damage caused by hurricanes and the resulting floods in the past couple of years. The happily surprised ones had customer service professionals who had advised them of policy limitations and had placed the best available coverages for their exposures. Giving superior personal service adds income to the agency’s bottom line, boosts account retention, and reduces exposures to errors and omissions claims. And it makes for satisfied, not surprised, customers. Superior service includes discussing other coverages with your personal lines customers, then recommend-ing additional policies or improving coverages on an existing homeowners or personal auto policy by choosing appropriate endorsements. To simplify this process, many carriers have a select package of endorsements or enhance-ments that will increase internal limits and broaden definitions. Others have an assortment of endorsements to choose from. Knowing what is available from your carriers is extremely important, and you are a true customer service professional when you spend a few minutes, in person or on the phone, helping your clients select the appropriate policies or endorsements for their exposures. It’s often a matter of asking some strategic questions, without using what one CIC National Faculty member calls “technobarf” (the tendency to use terms only insurance people understand) in your discussion. “Are you aware of the flood limitations in your homeowners policy?” Many of your clients have flood exposures, and these exposures aren’t necessarily located in mapped flood zones, where mortgage companies would require coverage. Solutions can come in the form of flood insurance (be careful with the limitations), or perhaps a difference in conditions policy is in order. “What are your hobbies?” Many service representatives ask their personal lines clients, “Do you have a business in your home?” Those clients may initially say no, not realizing that the definition of “business” in the homeowners policy includes almost all types of moneymaking operations. And this definition draws a distinct line between coverage and the lack of it for many exposures. To get a clearer picture of the exposure, a better question might be, “What are your hobbies?” This may lead to a discussion of items an insured makes in the home and sells, such as pottery, quilts, toys, watercolor paintings, or furniture. Because the defined dollar limit for home business income is just $2,000, if your insured sells any of these items at flea markets, garage sales, online, or from a shop in what used to be the garage, the insured’s homeowners policy could exclude coverage for a “business” loss. In many areas of the country (e.g., near ski resorts, sports venues, and beachfront properties), residents make good incomes by temporarily renting their homes to others. The homeowners policy may limit coverage because renting fits the definition of a home “business,” or the policy may restrict coverage for theft. “Do you have anyone living with you who is not a family member?” The insured may be sharing his or her home with boarders, exchange students, or significant others. Coverage may be limited for these individuals and their property, and you may need to request endorsements to address these exposures. “Is it a farm?” It’s common for home owners to have several acres with huge gardens, or horses, cattle, goats, chickens, and pigs. It’s a situation often called a “hobby farm.” The homeowners policy doesn’t necessarily include a definition of a farm, so we need to consider some questions: Does selling three bushels of tomatoes a week at a farmers market make a farm? Or do three goats in the yard make a farm? These tomatoes or goats may not even be for sale, so it doesn’t fit the definition of “business,” but carriers may consider any of these situations “incidental farming” and exclude coverage. Many carriers offer endorsements to solve the problem. Or you can place the coverage in a separate policy. It’s important to continue to ask questions. “Would that item raise eyebrows at the Antiques Roadshow”? It’s wise to ask your clients, “Do you have any high-value items in your home such as jewelry, guns, furs, paintings, or cameras?” This is an important question because homeowners policies usually limit the amounts paid for theft and other perils. It’s essential to determine the value of such items before a loss. Insureds are unhappy when they must argue value with a claims representative at the time of a loss. The goal is to substantiate the existence of the piece and insure it for its appropriate value. This usually means getting a copy of the bill of sale or appraisal in the underwriter’s hands before the item is gone with the flood, tornado, earthquake, or fire. Attaching a scheduled property endorsement to the homeowners policy can be the solution for many high-value items. You may be familiar with the form, which broadens coverage and anticipates the sorts of items previously mentioned. But you may not realize that this form can also cover other items: baby grand pianos, one-of-a-kind granite dining room tables, etc. The unendorsed homeowners policy includes all of these items as personal property, usually with a limit of 50% of the dwelling value, and it does not cover perils such as flood or earthquake. The scheduled property endorsement or a personal articles floater will appropriately insure valuable items and frequently includes much broader coverages. Keep in mind that a jeweler or an antique dealer may make your client smile with a fantastic sales price, saying that the appraised value is more than twice what the client is paying. While the scheduled property endorsement pays for one-of-a-kind fine art items at agreed value, even this endorsement will not pay the scheduled amount on replaceable items that are not considered fine art. Instead the endorsement will pay actual cash value, replacement cost, or the amount the “market will bear” at the time of the loss. This may be far less than the “appraised value,” meaning that the client may have paid a higher premium than necessary, which will erase that smile. It is crucial to determine and schedule appropriate values for these objects prior to a loss. “Do you belong to a homeowners’ association?” Many of your clients belong to homeowners’ associations, whose bylaws allow for assessments to members for losses not covered, or inadequately covered, by the association’s insurance. The homeowners policy provides only minimal coverage. Adding the appropriate endorsements will better protect your insured’s assets. You also may need to order directors and officers coverage when your insured is the president of the homeowners’ association. “What is the inflation rate of home prices in your neighborhood?” As home values are increasing exponentially in some parts of the country, homeowners need assistance every year to think in terms of the growing replacement value, rather than the amount they originally paid for the house. And because values may increase by double digits during a policy term, you may need to steer clients toward an inflation guard endorsement with an appropriate percentage. To start from an educated position, you may need to research likely locations of these escalating home values on the Internet before you approach your insured. Make sure it’s the replacement cost of the home, and not the land value, that’s soaring. “What other structures are on your property?” Many home owners forget to mention additional structures on their residence premises. They may think their homeowners policy covers these structures under the dwelling value. However, most homeowners policies cover “other structures” at 10% of the dwelling limit. When the policy considers a guitar-shaped, in-ground swimming pool to be an “other structure,” a big loss may make for an unhappy client. And what about the hot tub and changing room behind the pool? Your insured may also have a storage building or shop out in the back. The proactive solution is to ask about other structures. “How much would identity theft cost you?” You don’t have to ask whether your clients have an identity theft exposure; they all do. The costs can easily exceed the small amount available under a homeowners policy. Remember, the $15,000 limit available in the identity fraud expense endorsement may be inadequate for high net worth clients. “Is your watercraft a yacht?” Agents seldom ask about watercraft exposures unless a client brings them up, but the typical homeowners policy mentions the subject at least 10 times, usually to restrict coverage. For instance, the policy limits property coverage to $1,500, and then covers some losses only if the boat is on the insured’s premises or inside a covered building. For liability, the policy covers the insured’s sailboats under 26 feet in length or motorized vessels under 25 horsepower. Though umbrella policies may offer somewhat broader coverage for watercraft, you will minimize unhappy surprises, maintain your professional image, and avoid possible E&O claims if you find out about the exposure and offer a watercraft or yacht policy, which grants much broader coverage. “Where do you go in that golf cart?” A common (and often improperly insured) exposure is the motorized golf cart. Found darting from homes to grocery stores and barbershops in many communities, these alternative rides may even make appearances on golf courses. Your clients may not be aware that, unless their community fits a specific definition, the homeowners policy commonly limits liability coverage to the golf course proper, and it excludes or limits coverage for physical damage to the golf cart itself. Standard homeowners carriers offer endorsements that provide some physical damage coverage. But better still, some carriers offer golf cart policies (similar to the motorcycle policy), which provide more comprehensive liability and physical damage coverage. The questions may start with, “Do you play golf?” “What about that server?” Other uninsured or underinsured exposures you may discover with some well-chosen questions are high-value home computers (even business servers), motorbikes, or sump pumps people keep on hand for basement flooding. You may also learn about valuable papers (e.g., old tax reports, legal papers an executor may have on hand, etc.), and business papers (e.g., “dead” files) stored in a garage. Besides the value of the papers themselves, files that belong to your insured’s business or employer should raise a red flag because, beyond their intrinsic value, business papers stored in an unattached garage also leave the structure uncovered. “Do you drive a company car?” Many companies provide vehicles for sales or management professionals and may give them permission to use these vehicles as personal autos. These cars often are used as second family cars, or in some cases a company car is the only family car. If your client has permission to use the company vehicle for any need, the company policy will provide coverage. However, without permission to use the vehicle for other than company business, the individual will not have coverage under the company’s business auto policy. Either way, unless the client has an individually owned car listed on a personal auto policy, there’s no coverage for cars the client or family members rent or borrow. You will need to offer an extended non-owned auto policy or endorsement, but keep in mind that this form usually provides only liability coverage and includes no physical damage for those borrowed or rented cars. “Are you leasing that Rolls?” High-income insureds may drive a Lexus, Rolls Royce, Cadillac, Hummer, or Porsche, with a sticker price exceeding $70,000. They also may have opted to lease the vehicle. During the early years of the lease when payments are far less than the value of the vehicle, the personal auto policy may not pay the full amount owed to the leasing company in a total loss, leaving your insured responsible for the difference. One solution is an auto loan lease endorsement. “What about other automobile issues?” Be aware that some insurers are now offering personal automobile coverage with a feature that replaces the insured’s totaled car with a brand new car. This coverage works a little like a warranty; it’s good for a certain time or a certain number of miles. Other questions may come up as you photograph a car for the file. Is there custom body work or paint that would increase the value of the car? Is there special electronic equipment that was not factory installed? Are you an insurance customer service pro? Your clients will think you are an insurance customer service pro if you have asked good questions and advised them of coverage limitations, helping them choose coverage or offering assumption-of-risk solutions that will keep them from being unhappily surprised when a loss occurs. * The author |
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