Poll: Sinking Home Values May Prompt Risky Insurance Decisions

November 4, 2008

  • November 4, 2008 at 11:23 am
    Beau says:
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    A bunch of people there will go ahead and lower the value on their homeowners insurance, and then when the next round of fires hit some of those people will lose their house. At that point they will turn around and sue their insurance carrier for not properly insuring their house to value, causing them to not be able to rebuild the house that they lost.

  • November 4, 2008 at 1:19 am
    Mike says:
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    That is one of problems with direct writers and call center enviroments. Hopefully a good (are there many of them anymore?) agent will take the opportunity of that request to educate their client.

  • November 4, 2008 at 3:33 am
    DB says:
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    As a direct writer I cannot arbitrarily lower the replacement cost on a policy to reflect an amount less than the estimated RC given by Marshall/Swift/Boeckh. The only way to lower the RC is to have the insured fill out and sign a RC worksheet showing their justification for desiring to reduce the coverage. Once they do that the onus is entirely on them in the event of a loss that results in an underinsured claim.

    2 years ago we were constrantly bombarded with insured’s saying we were underinsuring their home. they were basing that statement on the market value of the house and not the RC. Now it is the opposite. I have found that simply explaining the difference between RC and MV in 99% of the cases solves the problem. The answer is in communicating with your insured’s on a regular basis and not only after a claim is filed.

  • November 4, 2008 at 6:44 am
    Compman says:
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    With the economy tightening, I am seeing more and more of my clients trying to squeeze that extra dime out of their insurance costs. Penny wise and pound foolish most of them are. I have business owner’s wanting to lower their BPP in half, or drop it all together and just get liability to satisfy the landlord. I advise that they will lose their loss of income coverage as well and they don’t care. I even had one personal lines client a few months ago add 16yr old twins to his auto policy. He got the bill for it a little later and called and was irate over the additional costs. I advised that by adding two 16yr olds, the risk the insurance company was taking was incredibly higher than before, justifying the increase. His response was to cancel his personal umbrella to save $400 a year. I pleaded with him to keep the umbrella since now is when he needed it even more since his 16yr olds were now driving. I couldn’t convince him. To top it all off, this guy is a professional that makes a good low six figure income. Not only did I have him sign the cancelation request for the PU, I had him sign a statement that I strongly advised him not to cancel his PU and to not only keep the umbrella, but raise the limits as well. So now when one of his snowflakes gets into a big accident, he can’t come back and put the blame on me.



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