In the last few months I’ve discussed business insurance issues with several business owners and centers of influences who regularly refer business to us, and what I’m learning or re-learning is that like so many business advisors, there are insurance brokers who are really good problem solvers and there are so many more who just create more problems for their clients than they solve. I question, how can this be? How can so many insurance brokers not be better at solving problems than creating them?
The answer is pretty simple. In today’s business world which is so rushed, there are some of us in the NY insurance brokerage community that take the time to ask the right questions before we write a policy or renew a policy so we get it right, and there many brokers that have a client fill in a quote form and give the client what they ask for. Unfortunately, clients don’t really know what they need or how their insurance should be structured, so leaving it up to a “quick quote” system or form really is of no use and only will create problems down the road.
I have found this to be true in two areas that I’d like to cover today.
The first is common with real estate accounts. As a leading real estate insurance broker in New York, I have become familiar with situations where property owners go out to bid with a minimal amount of information they submit to a handful of brokers who go to work on blocking the market so they can obtain quotes for the owner. Unfortunately, there’s little conversation between the brokers and the owner and the broker never goes out to visit the location to be insured or do any research on the locations. If the policy is bound, there’s inherently going to be problems with this policy if a claim occurs because no one did enough digging to learn what all the exposures are. Case in point is an insurance problem a referral source brought to me recently where a building owner didn’t have the right type of crime insurance and lost over $100,000 to a hacking event. When I asked how this happened and what process the insurance broker followed to write this policy, I learned that there was no process. The building owner sent a request for proposal to this broker and got a great quote. Unfortunately, that great quoted didn’t have broad crime insurance included so while they saved about $12,000 on their insurance bill they paid over $100,000 out of pocket for an uncovered claim.
In another similar example which relates to contracting and construction we recently were hired to untangle a mess that another broker created for a contracting account. As a well known construction insurance broker in New City, NY another lawyer had come to us with a client that had a complex workers compensation problem. Their current insurance broker had not identified all the states the client was doing work in or had offices in. Because the contractor had a permanent location in New Jersey they should have had NJ as a listed state on their workers compensation policy, but because their broker was not a skilled construction insurance expert, they failed to recognize this exposure and thought that the “all-states” endorsement would cover workers outside of New York.
We were able to negotiate with the insurer to add NJ to the policy to avoid not only an uncovered claim, but also a penalty from the state and potential litigation from the injured worker. Thankfully it was a minor claim, or we may not have been able to leverage our underwriter to make this accommodation, but it showed us once again how inexperienced insurance brokers in a rush to just procure coverage can make mistakes that can have serious consequences for their clients.
The bottom line is that insurance is a complex contractual relationship between the insured and the insurer. The policy is a contract that must be read and understood. Unfortunately, too many insurance brokers don’t take the time to read these contracts and pass them off as comprehensive protection for the client without an understanding of the nuances of policy terms, conditions, exclusions and limitations so at the end of the day the client gets hurt by inexperience and lack of expertise.
If you’re looking for the best NY Insurance Brokerage for all forms of commercial insurance, you only need to know The Coyle Group. Contact our President: Gordon B. Coyle, CPCU, ARM, AMIM, PWCA for a consultation at 845-474-2924.