If you don't need it - don't buy it!

Most of us have experienced the frustrations of having to pay for a bunch of TV channels we don't really want in order to get the ones we do want.  Insurance policies are no different. You end up paying for stuff you don't need.



Most home insurance policies are packaged much like your cable packages.

The insurance company designs a package of coverages, a full meal deal type of an approach, that will meet the needs a large majority of people purchasing insurance.

Your advisor then tweaks your coverage by adding little side policies in order to address shortfalls and absence of coverage.


Many of these packages contain coverage that will never be utilized or needed.  If you don't need it, you can't say; "Well give me a discount and take that coverage off".   Let's use an example so you understand what I am talking about.   Outbuildings - some policies cover outbuildings at 10% of the home value, while others cover 20%.  If you have no outbuildings you get the coverage anyway.

A lot of these packages are designed to sell you and your agent on getting this particular policy.  They get used like a sales tool.  This policy offers the most therefore it is the best.

Most advisers pick a favorite package of insurance they sell most of the time.  They talk about all these packaged coverages and why the policy is so good.

I am doing this post because I recently had a customer who got a quote from me and decided to get me to look after his insurance needs.  We went through the process and placed the insurance.  He phoned me back after talking with his previous advisor who did not have too much good to say about the package of insurance I sold him.  My client was concerned but was unable to offer any specifics as to why the other advisor thought that the policy I got for him aw insufficient for his needs.

I do not do this very often, but I figured this time I was going to do a three way thing.  The customer, myself, and the other advisor.  I did not expect him to participate, but he did.

Here's how it went.

The other advisor agreed to make a list of all the deficiencies in our policy. He proudly proclaimed; "See, our policy has a lot more coverage, better limits and fewer exclusions than the policy you sold this person.

• We cover $10,000 worth of jewellery - your policy covers $5000
• We cover 20% on outbuildings you cover 10%.
• We have bylaws coverage, your policy doesn't 
• We have business property at $10,000 you only have $3000. 
• and so on. 

He was right on everything he said, but..........

I asked him and the client;

• How much jewellery does he have?  $2000 at most
• Does he have any outbuildings worth more than what we have insured?  No he has none.
• His home is 3 years old and there are no bylaws in this subdivision that would not allow him to rebuild this house exactly as it is right now.  
• Does this client have business property?  No, none.
• and so on. 

The difference in premium was $310. 

Needless to say the client was more than happy to go through this exercise with me.  He learned a lot about insurance.

The package I recommended was sufficient to address all of his needs and it was designed by an insurance company to compete for a particular type of client they like to deal with.  The other policy was designed to attract a completely different type of client.  Would I recommend the policy I sold this client to some of my other clients.  No, I would recommend the policy this other advisor would have sold them because to add on coverage they would need and use to this particular policy would end up costing them more.  

I am always one for matching up my client's demographics with a company that truly likes to insure them.  This way the insurance company is much more in tune with the needs of the customer because that's the type of people they deal with most of the time.   Here's the truth.  If a company targets lower income families and people on a tight budget, when it comes time to claim, they understand that their customer doesn't have the cash to just go out and replace stuff.   They may issue a check for $5000 on the spot so that this person can start replacing the stuff they need right now. They know what circumstances to expect and they have a way to deal with it.  Companies that target affluent customers who usually have air-miles credit cards with $50,000 limits seldom run into a client that needs this kind of consideration.  

There is more to finding a solution than picking a policy that meets the needs of just about everyone imaginable and blindly selling it to anybody and everybody.

The No Hassle Insurance Guy 780-872-5566