What do we mean by G-A-P-S you ask? Actually, it’s is just plain old coverage gaps. You know, the ones you can probably find in every customer’s file.
Selling on coverage gaps is a great strategy to avoid the premium wars. So, instead of knocking heads with competitors over who has the cheapest premium, concentrate on delivering value for your services by finding the gaps or duplication in your client’s coverage.
Philip Wise, CIC (Insgroup Inc) has used this technique for 10 years to build his Houston agency. “We focus on the cost of risk with our prospects and clients, not just the insurance premiums they currently pay” Property Casualty 360.
Where are the gaps? Here’s just a few (some you may already know) to give you a flavor for how you can be the legendary agent who comes to the rescue:
- Automobile Gap: The Car Lease Clause: Find out if your customer is leasing his car. It is unlikely that anyone has told him that if he allows his insurance to lapse, even for a moment, the lien holder (lessor) can either repossess the car or buy a policy at a steep rate. That will ruin anyone’s day. Setting up an auto pay plan can prevent lapses.
- Homeowners Gap: Undervalued Jewelry. Everyone knows that the typical homeowners policy covers only minimal jewelry. So, a policyowner who just bought his wife a new sparkly anniversary ring has a gap. Some agents are using “push notifications” to ask, “Bought any new jewelry lately?” Guess what? You’ve plugged a gap.
- Homeowners Gap: Change In Title. Many families set up family trusts to avoid probate and for other estate purposes. They transfer title of their homes, jewelry, boats and other assets into these trusts without realizing the insurance implications. Trusts are entities, insurance policies deal with individual owners. Could the insurer deny the claim? Possibly. You can suggest a simple change to add the trust as additional insured; or if the trust is irrevocable or a corporate trust, a liability endorsement to the dwelling policy. Are you the hero or what?
- Homeowners Gap: Worker or Employee? Injuries of “casual” workers at your client’s home are likely to be covered by their HO policy. A recent court case, however, deems any person who hires an unlicensed person to perform duties that require a license is an employer. Example, a guy hired his neighbor to replace his roof (obviously a required license job). The neighbor breaks his leg the first day and sues. The policy claims the owner is an employer who needed to buy workers comp – not covered by the HO policy. You bring this up and suggest that any contracts include work comp or define the contractor as an independent contractor.
- Life Insurance Gap: Underinsurance. 50% of the families in the U.S. have NO life insurance, 80% of the rest are underinsured. The biggest gap is the consumer’s view that the primary role of life insurance is to protect lost income or to pay final expenses. Geeez! How about demonstrating the effects of an unpaid mortgage, college for a couple kids or a pot of money to cover a non-existent pension? The other biggest misconception, backed by many studies, is the cost. Show them just how cheap a 20-year term can be.
- Commercial Gap: The Agreed Amount Clause. If your client underestimates his building replacement cost, he could be liable for a coinsurance penalty. Adding an agreed amount / agreed value option removes the penalty.
- Commercial Gap: Improper Use. Ask the owner of a commercial building if he knows of or allows any tenant to live on the premises. If so, he may not be covered for a major claim. It’s true, somewhere in the bowels of that policy, you will probably find that using a commercial building as a residence is prohibited. The tenant must stop doing so and you can be the hero who saves the day.
Want to learn more commercial coverage gaps? IRMI sells the “Gapper,” a software program that uses a survey questionnaire and policy review to produce a comprehensive report showing coverage gaps. In addition to “gap control,” a report like this from a third party gives you lots of up-sell opportunities.
Can you see where your counseling on any one of these coverage gaps could cast you as the hero well worth your weight, even at a higher premium?