Insurance is a cost of living (and doing business) – Period.

As insurance agents, brokers, advisers, risk managers – whatever you want to call us – we hear it all.  The majority of the time it is negative statements regarding insurance – mostly about premiums, bills, audits, etc.  We always hear from an individual or business owner that one of their friends told them how to save a fortune on their insurance or how to scam the system (see “recording employees as subcontractors”).  You hardly ever hear from one of your friends how insurance saved their lives – literally or financially – or how it rebuilt their home after a Hurricane Katrina or Sandy. Yet, the never ending search for people trying to get ‘something for nothing’ continues.  Frankly, it’s a shame.thCAYTMVMJ

Why does everyone want to save a fortune on their insurance premiums yet they are willing to go buy the latest technological gadget?  They want the social status of having ‘the best’ but are unwilling to pay for the best protection.  Individuals or businesses that pay the extra money for more insurance coverage should be applauded and advertised.   They should be proud that they have the best protection money can buy.  Instead – everyone wants less – less coverage, lower premiums, less headaches and so forth.  The best way to put your family in a position with less risk is to pay for better protection.

I like to use the example of people who pay to heat their homes (for those unaware, we live in WI and therefore, this is mandatory).  What temperature do you keep your thermostat at during the winter months?  I would guess that the average is somewhere between 65 and 70.  Why?  That is where we are most comfortable – not too hot and not too cold.  It also avoids us having to pay for problems that may arise – like illness or freezing pipes.  Why not keep the thermostat at 45 or 50 degrees?  The human body would be able to survive, but your life would be extremely uncomfortable and probably miserable.  We are willing to pay for that comfort – with very few complaints and very few questions asked.  We correlate paying for heating as a cost of living in Wisconsin.

Why don’t we correlate paying for insurance and protection as a cost of living (or doing business)?  My guess is that it is the perception that insurance is a scam, not worth the money, and that insurance companies make billions of dollars.  Some of this is true and most of it is false, but people need to realize the billions of dollars the private insurance industry pays out on a yearly basis to restore individual lives.  Every individual certainly has every right to under insure or not purchase insurance at all (except for auto liability insurance in the state of WI).  However, don’t expect any sympathy from your insurance advisor when an accident does occur and you don’t have proper coverage.  Would you have sympathy for someone who turned their heat down to 30 degrees and then complained about frozen pipes?  I didn’t think so.

As always, talk to an insurance professional when determining what coverage is appropriate for you.  If you are paying for the best coverage you can afford – good for you.  If you are on the other end of the spectrum, consider all possible outcomes and determine what you believe is in your best interest.

Personal Auto Insurance: Liability Limits – How much is enough?!

When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing it was bought to do.  The common law of business prohibits paying a little and getting a lot – it cannot be done.”  – Unknown


Do you know what liability limits you carry on your personal auto policy?  Everyone is mandated by state law to carry liability insurance when driving a vehicle; however, few people know how much liability insurance they have or how much is enough.

Both producer and consumer are to blame for this issue – as it is both a lack of explaining by the producer and a lack of wantingto understand by the consumer.  The culture, processes and procedures of our industry play a large role in this problem as well.  Many consumers want an ‘apples to apples’ quote – and all too many producers are willing to fulfill that desire.  Many producers assume that the current or prior producer did his due diligence and that the liability limits on that customer’s personal auto policy are sufficient – a terrible assumption to make.

Be sure you have enough liability limits to cover damages that you could be liable for!

The primary responsibility – in my opinion – falls on the producer in this situation.  They have a fiduciary duty to act in the best interests of the client.  A knowledgeable, responsible producer should take the time and resources to determine what liability limits are appropriate for each customer and not take a ‘one size fits all’ approach.  The secondary responsibility is on the customer to listen and understand their coverage and be open to the suggestions of their insurance producer – realizing that cheapest may not be the best and that with liability insurance, you get what you pay for!

A separate blog post will define in detail liability coverage on a personal auto policy; however, it basically provides coverage if you were sued for damages (bodily injury and property damage) that you are liable for causing.  How much coverage do you need!?  Simply, as health care costs continue to increase, the need for higher insurance limits rise as well.  If you are liable for causing bodily injury, the injured party will incur health care costs that you are responsible for – it’s as simple as that.  The liability coverage afforded under your personal auto always has a per occurrence limit – this caps the amount the insurance company will pay for any one incident.  This limit should be enough to cover the majority of your personal assets.  If you are sued and your liability limits are exhausted – you could be personally sued for the remainder of the settlement, which puts your personal assets at risk.  In addition to damages, you’ll also be responsible for defense and legal costs – which can add up quickly.

An easy and cost effective way to protect your personal assets is to purchase a personal umbrella policy – which we always recommend.

Be sure to review your insurance policies at least once a year to evaluate whether or not you are properly insured.  It is critical that you listen to the advice of the insurance producer and tailor coverage to your specific needs.