Why you MUST be involved in your insurance purchases and understand risk:

There are a few reasons why you MUST be involved in your insurance purchases and understand risk.  It’s time to roll up your sleeves and get into the weeds of your Insurance purchases.  Here’s why…

Your life is constantly changing

Only you are aware of how quickly your life is changing.  Your broker, agent, and/or consultant are not omniscient.  If you get involved you can provide helpful input that might change the way your advisers are thinking.

Everyone can make mistakes

We are all fallible.  Even the insurance professional.  Therefore, if you the customer get involved and become educated on insurance principles and concepts, there is a second set of eyes to review the insurance professional’s work.

Coverages, exposures and limits must be carefully evaluated over time

New threats and exposures will emerge – For example, Cyber liability may have emerged because you now started a small business, have an unsecured network, or divulged personal identification information.  Or your family may be on social media and you now have a exposure to libel/slander.

Coverages change – a coverage form change by your carrier can have direct impact on your coverage in the event of a claim.  It’s crucial that you know how, why, and where the changes are occurring.  What to do in the event of a claim or if any of the conditions for filing claim have changed.

Your limits need to be evaluated – policy limits need to be evaluated due to expansion of your business, your home replacement value increases, you need a larger umbrella policy, etc.

Your family needs this protection

Whether you are talking about Life Insurance, Auto Insurance or 3rd party liability coverage.  Your family, love ones, guests, or a 3rd party you injured need this coverage.  It’s your responsibility to have prudent coverage in the event of an accident.

Inflation – rising health care, rising expenses.  If you don’t understand the inflationary impacts over time, you might decide to purchase far too little limit to cover your family in the event of your death, or a guest in the event of injury at your home.  Health care and other inflationary pressures will continue – if you understand these economic forces – you will be less at risk of uninsured exposure.

Your net worth is exposed

As mentioned above, any uninsured exposure can result in direct loss to your net worth.  Although claimants can decide to settle within your policy limits, it is not required.  Especially if you are at fault, a judge and jury may decide your negligence entitles the claimant to more than your policy limits.  Therefore, you may be forced to sell, or liquidate other assets to pay for your negligence.

Too much to lose

There is too much to lose for an individual, family, or small business by not getting involved in the insurance purchase.  Learning the language, insurance terms and engaging with your attorney, broker, family, and employees is how you will come to better understand your risk.

The future may require it

Who knows what the future will hold, if there will be advisers, brokers or consultants to help you understand your risks.  The world is constantly looking for the next Uber of Insurance.  More and more responsibility is being pushed onto consumers, in a “buyer beware culture”.

We think the future role of the broker and agent will evolve over time with this technology, but what if the role is eliminated from society and has no need in the market.  Will you be prepared to or understand the coverage you are buying?

The new technology may helped you save money on the upfront transaction costs, but did it save you over time if you don’t understand your risk and this is the first time you have had to get involved in the insurance purchase.

The time and expense is worth it

Even if you don’t have a home or homeowners policy, a family and life insurance, or a business with small business insurance – the time and expense is still worth it.

If you largest exposure is your Health insurance and Renters Insurance – these principles still apply.

Roll up your sleeves, learn as much as you can about insurance, understand your risks and get involved in your insurance purchases.

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Arnold Smith

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