Duplicating Coverage: A Major Agent Mistake

If you haven’t had the chance to read Curtis M. Pearsall over at the Insurance Journal, then you’re sincerely missing out on some tremendous insight into the ongoing issue of Errors & Omissions (E&O) claims brought about by green insurance agents “just duplicating” what a client already has.

Many clients — usually in the business world, but not limited to that — don’t want to “waste a lot of time” with boring insurance talk, so they will ask a new agent, when shopping around, to simply give them the same coverage they have but at a lower price.

While in theory that sounds simple, as Pearsall points out, you’re essentially taking on a major risk should there be problems with the client’s existing coverage — gaps that set them up for serious out-of-pocket loss in the event of a claim.

Pearsall writes: “You may be asking, ‘What did I do wrong? I was simply asked to duplicate the prior coverage.’ If you are thinking the problem is not yours, well, think again. The plaintiff’s attorney, representing the customer suing you, will look to prove that because this is now your account, it is now ‘your mistake.’ Clearly, duplicating the mistakes of the prior agent does not relieve you and your agency from any liability.”

So what can an agent do to ensure that he doesn’t end up “paying for someone else’s sins”? Three things:

One: Interview The Prospective Customer.

On the one hand, bringing in new business is a good thing. In that sense, the prospective customer is worth a little upfront attention. Prepare a short interview with the client wherein you ask them some questions about their existing policy. Get a sense of what they are paying in premiums, what coverages that they have in place, and why they want to leave their current insurer. From this, you should be able to derive their true intent and adequately segue into the reason you can’t just “duplicate what I already have” without some research. Explain to them that doing so without properly going through their coverages with them could actually make them more vulnerable to financial loss.

Two: See If You Can Identify The Weak Spots.

Once you’ve re-calibrated the prospective customer’s expectations, they’ll likely be more willing to let you diagnose any potential problems with their existing coverage versus actual fiscal needs. This is where you’re the likeliest to earn their trust and business. If you can show the prospect gaps in their existing coverage, then you have built-in credibility over their existing insurer. It’ll also show them that you care enough about their business to do the extra legwork.

Three: Make Sure He Has A Better Understanding Of His Coverage.

By the time you’re finished with the prospect, they should have a clear understanding of what you can offer them that their current company isn’t. They’ll also walk away wiser to their current policy’s strengths and weaknesses. If that’s enough to move them away from their provider, you are likely their go-to insurance agent.

In Summary

Knowledge is definitely power in the world of insurance. By educating a prospect, you stand more of a chance creating a lifelong customer than trying to hard sell them, or by simply taking their dictation to “sell me what I already have.” As one commenter noted on Pearsall’s post, “If a client asks me for Apples to Apples quote, I simply say, “If you’re looking for the same coverage you have now, then you don’t need me.” Show your insurance leads and prospects that there is more to insurance coverage than a monthly premium, and you’ll have their confidence for life. Good luck!

As for the Pearsall post, check it out in its entirety at this link.

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