Claire-ification

Are you a member with a question? Contact IA&B Vice President - Advocacy Claire Pantaloni, CIC, CISR to find the answer at 717-918-9202 or ClaireP@IABforME.com.

QUESTION:

If we want to encourage higher property limits, can we send a letter only to insureds with lower limits, or must we send our letter to everyone?

ANSWER:

It is better to communicate the need to review their limits to all clients. Even if you feel that some have adequate limits, and I’m sure you do, there could be a catastrophic claim where they run out of limits. Unfortunately, if they had not received the letter encouraging them to review their limits, or if they received the letter on one policy but not the other, the lack of consistency could backfire on the agency.

A good approach could be to provide a renewal letter that asks clients to indicate if they would like to see additional limit options or acknowledge that they feel their limits are adequate to meet their needs. Keeping a record of your communication efforts and responses will obviously be important.

OTHER THINGS TO KEEP IN MIND:

▲ When discussing limits with clients, avoid making specific recommendations. If they ask, you can tell them what is typically carried, or point them to material that could help them determine what limits are adequate. Ultimately, you want the responsibility to pick limits to remain squarely on the customer.

▲ Document your discussions about limits in your file, and email a summary to the customer to memorialize the conversation. Any customer acknowledgements that higher limits were offered and declined are also very useful.

▲ Replacement Cost (RC) Estimators are nice tools, but not a panacea, and if using them, it is best to also use a disclaimer. (If you need one, our website offers several disclaimer options, including one for RC estimators. Visit: IABforME. online/EO-prevention)

In the current inflationary period, insurance-to-value and property limits are a serious concern. Keeping these suggestions in mind, you might be able to do your customers a service and generate extra premium at the same time.

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.