Case Study: Successful family with a direct insurance carrier.
Client “A” is a highly successful, professional, two-income family of four who initially had a direct insurance carrier. Both between 45-50 years old. He a surgeon and she an attorney. Their approximate net worth was in excess of $10M and a remaining lifetime earning capability in excess of another $10M. They owned multiple homes and some vacant land. They owned a modest amount of fine art, jewelry, watches and a collection of antique scales.
“CLIENT A” INSURABLES:
- A multi-property client with a primary co-op in New York City, a seasonal home in upstate New York, and a summer home in the Hamptons. The client also owns several tracts of vacant land.
- Two primary use vehicles, three collector cars & two drivers.
- Insurable Collections: $100,000 of fine art, $50,000 collection of vintage scales and $150,000 in jewelry & watches.
- A 65’ yacht
THE DIRECT WRITER VS. INDEPENDENT AGENT:
“Client A” felt strongly that they both understood insurance and were thus adequately covered for the daily risks they face. They did their internet research and they were confident that they had the best possible price.
The issue we commonly encounter when dealing with such families is the misconception that insurance is a commodity. To them, price is the predominant difference in carriers. The fear of “paying too much” dominates their thoughts when discussing insurance with friends and on social media. Captive insurance agents (who sell a single product line) feed into the misconception because their products tend to be of lesser quality. Untrained independent agents often fall into the same trap.
In reality, a good Independent Agent is a tremendous asset and trusted advisor for a client. The Independent agent provides valuable services such as risk identification & analysis, carrier guidance, claims assistance, insurability monitoring, and other services. Agents for direct writers are trained to work in volume and process through their calls quickly with little room for any guidance. Direct writers often leave their customers with a false sense of security.
In this case, the client’s CPA referred them to Daigle & Travers to have a proper coverage review completed to ensure there were no gaps in their property and liability insurance coverage.
Our process began with an initial client fact-finding phone call. The purpose of this call is to established a baseline of concerns, needs, and risks common to the individual or family. We need to identify all of the individuals, entities, risks and assets involved with the account.
After the initial fact-finding meeting we also performed our own internet due diligence of the client to get an understanding of how you may be perceived online. This assists our ability to identify additional risks, determine lifestyle and have an understanding of what the general public can easily find online pertaining to the client’s occupation, assets and general wealth.
We also require copies of the current insurance portfolio so we can assess the current program relative to our fact-finding, review of plan cost-effectiveness, and for comparison purposes. If a plan meets our standards, we leave it “as is” and provide applicable recommendations as necessary. In this case, there were a number of issues requiring attention. When working with a direct writer there is almost always coverage issues to be addressed.
We determined the clients New York City co-op policy offered a dangerously low structure coverage (Additions & Alterations) and even less personal property coverage. After the initial review, it was discovered that they were underinsured in excess of one million dollars in total property coverage. In the same conversation, we determined that clients lacked adequate coverage for their musical instruments, prized artwork, and jewelry. All of which were easily correctable
As we went deeper in the client’s background it was discovered that they owned multiple homes and vacant land as well. Their primary co-op policy would not extend liability to all of the vacant property and their current umbrella policy was legally incapable of extending liability to all of the required locations which created uncovered risk gaps.
This client did understand the need for liability protection and had purchased an (overpriced) umbrella policy through this same direct writer for $10M in coverage. Unfortunately, because of the issues on their underlying primary coverage it unknowingly left a sizable gap in coverage between the underlying liability coverage the umbrella the current agent failed to identify. Additionally, we determined that this client required a larger umbrella limit as well.
After a thorough review of all of the existing coverage and our own additional due diligence, we were able to go to the market to multiple appropriate insurance carriers and craft an insurance package with one insurance carrier that would eliminate all of the discovered gaps in coverage, correct the property limits and offer high limits on the umbrella over the 10M.
The client was very concerned about coverage and was very appreciative of the hard work we put into correcting the numerous errors that existed. They were thankful for the helpful advice we were able to provide and said, “We had no idea we didn’t have the proper coverage.” In this particular case, even with all of the corrections in coverage, we successfully provided a cost-effective program that netted an overall savings.
Let Daigle & Travers Insurance review your coverage. We have three convenient locations in Connecticut: Wilton, Darien, and Westport. One of our many experienced insurance professionals will be able to review your policies. We can be reached at 203-655-6974 or at email@example.com.