INSIGHTs & INTUITION

Q.What’s the biggest weakness in most people’s insurance armor?

Denise Magness

EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER WARNER & CO. INSURANCE FARGO, N.D.

For business clients, it is cyber liability coverage. All businesses need this coverage and may not be aware of how vulnerable they are, not only when storing client data and employee records and doing online banking, sales or purchases, but also to ransom, extortion or other cyber attacks.

For individuals, we frequently find homes underinsured by $30,000 to $50,000 or more. Many people focus on their home’s market value, but insurance uses current construction costs to determine the amount of insurance needed.

Insurance will rebuild your home after a disaster – if you have enough insurance.

A weakness we often see in people’s insurance is inadequate limits of coverage. For example, low or minimum liability limits do not provide sufficient protection for most people. Medical bills associated with a liability claim can quickly exhaust low limits and result in personal assets being exposed. Property limits can also be insufficient to replace property or buildings that have been destroyed.

When in doubt, it’s a good practice to seek advice from a professional agent, who can provide valuable advice in the design of a comprehensive and adequate insurance program.

A common shortfall in property/casualty insurance is not buying enough coverage, particularly when it comes to the lack of an Excess Liability or Umbrella Policy.

This policy provides an additional layer of personal or business liability coverage over and above existing underlying policies. This can be crucial in the event of a large loss in protecting you and your financial assets.

There are different types of Excess Liability policies available, including personal, farm and commercial. I encourage Prairie Business readers to consult with a professional agent, who can recommend and personalize the right coverage that readers need.

The biggest weakness could be many different things, such as a personal household not having life or disability insurance, or a business not having employment practices liability or cyber liability coverage.

But in my view, the biggest weakness of all is not having adequate liability limits. A high percentage of personal households and businesses do not have umbrella policies. Because it is so easy to cause a serious injury or be the subject of a claim in our litigious society, an umbrella policy will help defend if a fraudulent claim is made, or pay if a true accident or event does happen. Plus, the premiums are relatively small compared to the coverage that’s afforded.

Serious health issues cost patients more than just the deductibles, co-insurance and copays that even the best major medical plans make people pay. In surveys, up to 40 percent of patients report depleting their savings, and almost 30 percent report dealing with bill collectors.

Throughout the course of treatment and recovery, a patient loses his or her ability to earn a normal income for a time. And for most Americans, that loss of income is devastating.

The good news is that people can protect their financial health with the many supplemental benefits products that are on the market today and are offered through agents in their area.

George Bernard Shaw said, “The biggest problem in communication is the illusion that it has taken place.” Insurance is by nature a complicated product, and while we and our insurance agents do our level best to explain insurance and what each policy covers, it is often misunderstood.

Then to make matters worse, nationwide companies produce and run TV commercials intended to leave an impression that every loss is covered by their company at a better and higher level.

So, expectation driven by emotion versus knowledge can become a major weakness in people’s insurance armor.

Civilian labor force in the midwest, seasonally adjusted (in thousands)

America’s Top States for Business 2017

Unemployed in the Midwest, seasonally adjusted (in thousands)

Unemployment rates in the Midwest, seasonally adjusted

Violent Crime Rate - State rankings

family Income levels of children under age 18

Violent crimes per 100,000 people (2015)

DATA PROVIDED BY TOM DENNIS, PRAIRIE BUSINESS EDITOR