As a commercial and personal insurance broker we often have to justify more comprehensive insurance coverage while hoping that our clients remain safe and never need to submit a claim. Here are two examples of where our advice helped our client tremendously.
One of our clients purchased a $60k watch. We advised him to get worldwide coverage for a higher premium. He could have gone with domestic coverage for a lower premium. However, we encouraged him to go with the higher coverage. He agreed and we wrote the more comprehensive policy for a higher premium. 9 months later, the client was traveling in Spain. As he was walking down the street, with the watch on his wrist, he was held up at gunpoint. Noticing the pricey watch, the muggers ripped it off his wrist and ran off with it. This unexpected and upsetting encounter was distressing but luckily the watch was covered even though the client was traveling overseas. The client was extremely grateful to us that we advised him to get the worldwide coverage. The higher premium and broader coverage saved the client a large amount of money and emotional distress. When purchasing a pricey item that will be used and taken out of a safe it is important to insure against the higher risk.
One of our clients owns a $7 million strip mall in Florida. While renewing his coverage the client was given a cheaper quote with a 5% wind deductible as opposed to the 2% deductible we were offering. While we could have matched the quote with a higher deductible, we discussed his location and risks and advised that since he is located in Florida the risk of wind damage is great and the damage can be severe and devastating. The chances of wind damage for buildings in Florida are obviously very high which makes underinsuring or self-insuring a bad idea. He trusted our judgement and went with the higher premium and lower deductible. Needless to say when Hurricane Irma hit a few months later his decisions paid off. The higher deductible could have been extremely detrimental at a time when they were working on to rebuild.
There is a great temptation to underestimate risk and to trust that negative forces will not work against us. However, “muggings” by individuals or by nature are bound to happen and it is the logical and prudent choice to protect ourselves and our property. Of course, we need to weigh risks versus price when choosing how to protect ourselves. Not every higher coverage or lower deductible is worth a higher premium, but a serious discussion of the risks inherent in every situation is necessary. While optimism and hope are a good attitude to have, logical and clear understanding of the risks must be present when making important business decisions.
Don’t forget to keep your tenants safe!