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Handling the Insurance Coverage Needs of Homeowners

Posted by Jon Anderson on Sep 9, 2016 10:30:00 AM

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The average homeowner is woefully unprepared for any disaster striking their home, despite having home insurance coverage. Many simply assume that their standard policy is sufficient to bail them out of any eventuality. Unfortunately for some, the realization that not all policies are created equal often comes too late.

A recent national consumer survey commissioned by Trusted Choice and the Insurance Agents & Brokers of America revealed that many homeowners lack adequate insurance coverage. Furthermore, most people do not fully understand their insurance policies. If disaster struck, many of these people would be caught mentally and financially unprepared.

So, many homeowners clearly have pressing needs that require fulfillment. That spells opportunities for insurance agents.   

It’s Natural to Anticipate Disasters

Depending on where in the country you are located, natural disasters might be a bigger issue for you than others. Homes in places such as the Florida Coastline are particularly prone to the whims of nature. At certain times of the year, such homes become susceptible to hurricanes, flooding, and tornados.

Floods, as it turns out, are the leading cause of disasters in the United States, according to FEMA. Despite that fact, there are many people lacking proper flood insurance coverage. Even some people living in renowned flood danger areas have not taken steps to ensure they have the proper coverage.

Most homeowners in California probably think their homeowners' policy covers them in the case of an earthquake.  CEA (California Earthquake Authority) runs TV commercials in an attempt to educate homeowners in California that their insurance policy doesn't automatically cover them, in the case of loss, when an earthquake strikes.  Each policy holder needs to be properly educated on this one simple, but extremely important, fact.

Standard insurance policies provide peace of mind for a variety of perils and is a significant first step for homeowners. Things like fire, vandalism, theft and even lightning are important things to safeguard against, and fortunately standard policies cover those.

But that is just the beginning. For some homeowners, especially those in disaster-prone areas, a careful analysis of their insurance policy will be necessary.

“Most people think that a basic homeowners policy will cover them in the event of a disaster,” says Robert Rusbuldt, President of Trusted Choice. “A startling number of homeowners have not taken some of the basic steps to adequately prepare for a disaster such as a hurricane or earthquake" (or earthquake added).  

There are opportunities for agents to help prospects understand the need to add extra coverage to their basic policy. The peace of mind that they think they have might well be an illusion. But you can help them build on that standard policy so that they end up with something more suitable to their particular circumstance.  

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Another Major Issue with Current Insurance Policies

Having a standard policy that does little to help in the case of natural disaster is a major issue for consumers. There is another major issue that needs addressing: an outdated policy. This problem is particularly prevalent in customers who have held their insurance policy for a long time.

In many cases, there is a failure to update the policy with new big-ticket purchases, renovations, or lifestyle changes. Depending how long a person has neglected to update their policy, their current insurance coverage could be painfully inadequate.

The standard recommendation is that policyholders review and update on an annual basis. During that period some might require increased insurance coverage while others might need less. In any case, as an agent, you can help remind and guide these customers so that their policies remain current.  

Identifying the Right Insurance Coverage for Homeowners

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So by now one thing should be glaringly obvious: homeowners are not very good at sorting out their insurance affairs. If they were, there would be little need for agents to step in. Fortunately, there are many opportunities to help the average homeowner navigate the apparent complexities of home insurance. If you can help your clients identify and secure the most suitable insurance coverage, they might well consider you their superhero.

Some clients might take a little persuading. Their minds might be entrenched behind a wall of false contentment, built up by a policy that is inexpensive but doesn’t cover all their needs. No doubt, persuading such clients to commit to costly insurance add-ons will be challenging. But superheroes don’t just take on the easy battles, right? Also when we sell "Value," cost isn't as big of a concern.

Whether working with a new homeowner or trying to persuade an experienced policyholder to buy extras, you will need to demonstrate a high level of knowledge. Clients and prospects want to hear exactly why you are proposing certain insurance packages. You need to understand their lifestyle, the area they live in, and how the weather will factor into their home ownership.

The more detailed your understanding, the better equipped you will be to identify the perfect insurance package for each of your clients.

Ongoing Insurance Coverage Maintenance 

Of course, the homeowner insurance coverage needs do not end with the closing of a new client. . Agents can play an important role in the all-important maintenance of a client’s policies. It is highly likely that your customers would appreciate an occasional call from you enquiring about their circumstances. You can also take the time to address any issues your clients might have.

There is also the annual policy review - a task that might benefit from a little prompting by you.  This "IFR" (Insurance/Financial Review), at a minimum, should be done annually.

Scheduling ongoing maintenance can seem like a lot of work to burden your agency with, particularly as you begin to take on more clients. But taking the time to ensure your current clients are happy and contented will help to secure them as a loyal customer for many years to come. And, as one Forbes article points out, “it’s far easier to sell to existing customers than to brand new prospects.”

Topics: blog, insurance prospects, insurance coverage

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