Ah, February! The month of love! No, not that touchy-feely romantic mush that leads to flowers and candlelit dinners. I'm talking about real passion--for high-tech wizardry!
And I don't just mean "boys and their toys." Women can catch the bug too. My lovely bride, for example, can readily be found working away on her PC while AOL Radio blares forth from her iMac (ostensibly purchased to develop graphics adventure programs for children, but in reality the world's most attractive Internet radio/Toontown access portal). And if she is forced by dire circumstances--say, God forbid, a recreational stroll through our neighborhood--to be separated from her desktop companions, astute fellow pedestrians will note the two thin white wires emerging from the general region of her ears and disappearing into her pocket, where resides her trusty iPod Nano.
To mangle Cat Stevens, "Oooh, baby, baby, it's a wired world." How did we ever get by with just TV? Now that rabbit-eared set is a home theater, and our refrigerator talks to the Internet.
What is our natural human instinct toward the people or property we love? To protect them from harm. Thus do the digital and insurance worlds intersect. Unfortunately, consumers are confused about coverage for their digital treasures. The Independent Insurance Agents & Brokers of America recently released the findings of a survey conducted by an independent research firm about consumer purchasing plans for the 2007 holiday season. Here are a few of the pertinent findings:
o "The survey ... presented respondents with five questions about insurance coverage for high-tech home electronics. An overwhelming seven out of eight households ... answered at least one of these questions incorrectly."
o More than half (55%) of those surveyed "mistakenly believe that their insurance coverage would protect their electronics in the event of an electrical power surge."
o Although nearly all respondents indicated they were preparing to buy high-tech electronics for themselves or as gifts, "only about one-fifth of survey respondents reported ever contacting their insurance agent with questions on coverage for high-tech electronic products when they purchased them in the past."
Consider what logically follows just from those three findings:
o Consumers don't understand their insurance coverage, but think they do.
o They're going to be extremely disappointed at claim time when they find this out.
o Few will bother contacting their agent to ask the necessary questions to discover their error. (But if they have an uncovered loss, they'll probably blame you.)
So what to do? IIABA's press release encourages consumers to contact their agents with questions. Don't count on it. Whether in the interest of sales or service, call them instead. History teaches us that opportunity lies with those who respond actively, not passively, to events.
First, start incorporating coverage information on all these tech toys into your agency communications--newsletters, Web sites, e-mail tags, wall posters, etc. Second, be sure you understand how the products you sell will respond to likely tech-item losses. You'll find that the homeowners policy actually treats these items much as it does other covered property, but there are key differences--differences that it's your job to know, of course, although I've found it's not only consumers who, for example, overlook the "electrical power surge" coverage issue.
In all the standard ISO homeowners forms offering named-perils coverage for personal property, the following limitation appears for sudden and accidental damage from artificially generated electrical current:
"This peril does not include loss to tubes, transistors, electronic components or circuitry that are a part of appliances, fixtures, computers, home entertainment units or other types of electronic apparatus."
That pretty much eliminates power-surge coverage for the tech items, doesn't it? I find that many agents, once confronted with this language, are at a loss as to what can be done about it. Here is the short and sweet answer: There is currently no HO 2000 program endorsement that completely eliminates this limitation. Many times I'm asked about the HO 04 14 10 00 Special Computer Coverage endorsement, but if you read the definitions, you'll learn that it does nothing to cover non-computer tech items, such as home theater systems, digital refrigerator/freezers, washer/dryers and literally everything else in the home that is now digital.
There is only one standard ISO method for getting around this limitation: Use the HO-5 coverage form, replacing the named-perils coverage on personal property with special causes of loss, which does not contain the power surge limitation. Yet, how many HO-5s have you sold lately? With all the high-tech items out there and more coming every day, shouldn't you seriously consider whether the HO-5 should become your standard homeowners offering? Sure it's more expensive than the HO-3, but have you checked the prices on tech stuff recently? Ask your carriers if they offer other alternatives, but be certain the coverage is equivalent to the HO-5 with special causes of loss for all personal property.
Even with the HO-5 or equivalent coverage forms, not every potential tech loss is covered. As the IIABA report notes, there are some incidents that do not fall under intended homeowners coverage (dropping the computer, having the plasma or LCD screen fall off the wall because of improper mounting). Furthermore, some possible usage can lead to limited coverage. (Business-use items are subject to internal and external limits.) And there some matters that the home-owners policy just does not properly address. (Devices may be covered, but data is not.) Deductibles are also a consideration for less-expensive but still valued items, like cell phones and music devices.
For some of these problems, astute agents realize there are valid noninsurance alternatives. "Whole house" surge suppressors are becoming more common and, depending on the price in your area, may in fact be the best solution. (Yes, those surge-suppressor strips you can plug your devices into are also protective, but show me a single person who has one for a dryer or refrigerator.) And by far the best protection for data remains regular back-up procedures, rendered even more practical with today's freely available (and increasingly inexpensive) portable storage devices, such as flash drives and external hard drives.
When it comes to love--whether of a kindred soul or a gadget--the implications are always the same: Love equals value. Value can be lost. Therefore, the object of love must be protected. Also, the greater the emotional (and financial) investment, the greater the need for professional, but also empathic and understanding, counseling.
So if love it is, put aside that sales and service mindset. Instead invite the smitten client to your office for consultation and reassurance. I can hear it now: "I only went to Best Buy for a cell-phone battery; I really wasn't looking for a new relationship. Yet, suddenly there she was-a 62-inch beauty with Bose surround sound. I can't explain what came over me, but since that day, we've been inseparable. Please say you can help me!"
Ain't love grand?
Chris Amrhein is an insurance educator and speaker with more than 30 years in the industry. He is also chief fun officer of www.insuranceisfun.com, where his newest book of insurance musings, "Yes, Virginia, There Is Insurance," is now available. Readers may contact Chris at chris@insuranceisfun.com.
And I don't just mean "boys and their toys." Women can catch the bug too. My lovely bride, for example, can readily be found working away on her PC while AOL Radio blares forth from her iMac (ostensibly purchased to develop graphics adventure programs for children, but in reality the world's most attractive Internet radio/Toontown access portal). And if she is forced by dire circumstances--say, God forbid, a recreational stroll through our neighborhood--to be separated from her desktop companions, astute fellow pedestrians will note the two thin white wires emerging from the general region of her ears and disappearing into her pocket, where resides her trusty iPod Nano.
To mangle Cat Stevens, "Oooh, baby, baby, it's a wired world." How did we ever get by with just TV? Now that rabbit-eared set is a home theater, and our refrigerator talks to the Internet.
What is our natural human instinct toward the people or property we love? To protect them from harm. Thus do the digital and insurance worlds intersect. Unfortunately, consumers are confused about coverage for their digital treasures. The Independent Insurance Agents & Brokers of America recently released the findings of a survey conducted by an independent research firm about consumer purchasing plans for the 2007 holiday season. Here are a few of the pertinent findings:
o "The survey ... presented respondents with five questions about insurance coverage for high-tech home electronics. An overwhelming seven out of eight households ... answered at least one of these questions incorrectly."
o More than half (55%) of those surveyed "mistakenly believe that their insurance coverage would protect their electronics in the event of an electrical power surge."
o Although nearly all respondents indicated they were preparing to buy high-tech electronics for themselves or as gifts, "only about one-fifth of survey respondents reported ever contacting their insurance agent with questions on coverage for high-tech electronic products when they purchased them in the past."
Consider what logically follows just from those three findings:
o Consumers don't understand their insurance coverage, but think they do.
o They're going to be extremely disappointed at claim time when they find this out.
o Few will bother contacting their agent to ask the necessary questions to discover their error. (But if they have an uncovered loss, they'll probably blame you.)
So what to do? IIABA's press release encourages consumers to contact their agents with questions. Don't count on it. Whether in the interest of sales or service, call them instead. History teaches us that opportunity lies with those who respond actively, not passively, to events.
First, start incorporating coverage information on all these tech toys into your agency communications--newsletters, Web sites, e-mail tags, wall posters, etc. Second, be sure you understand how the products you sell will respond to likely tech-item losses. You'll find that the homeowners policy actually treats these items much as it does other covered property, but there are key differences--differences that it's your job to know, of course, although I've found it's not only consumers who, for example, overlook the "electrical power surge" coverage issue.
In all the standard ISO homeowners forms offering named-perils coverage for personal property, the following limitation appears for sudden and accidental damage from artificially generated electrical current:
"This peril does not include loss to tubes, transistors, electronic components or circuitry that are a part of appliances, fixtures, computers, home entertainment units or other types of electronic apparatus."
That pretty much eliminates power-surge coverage for the tech items, doesn't it? I find that many agents, once confronted with this language, are at a loss as to what can be done about it. Here is the short and sweet answer: There is currently no HO 2000 program endorsement that completely eliminates this limitation. Many times I'm asked about the HO 04 14 10 00 Special Computer Coverage endorsement, but if you read the definitions, you'll learn that it does nothing to cover non-computer tech items, such as home theater systems, digital refrigerator/freezers, washer/dryers and literally everything else in the home that is now digital.
There is only one standard ISO method for getting around this limitation: Use the HO-5 coverage form, replacing the named-perils coverage on personal property with special causes of loss, which does not contain the power surge limitation. Yet, how many HO-5s have you sold lately? With all the high-tech items out there and more coming every day, shouldn't you seriously consider whether the HO-5 should become your standard homeowners offering? Sure it's more expensive than the HO-3, but have you checked the prices on tech stuff recently? Ask your carriers if they offer other alternatives, but be certain the coverage is equivalent to the HO-5 with special causes of loss for all personal property.
Even with the HO-5 or equivalent coverage forms, not every potential tech loss is covered. As the IIABA report notes, there are some incidents that do not fall under intended homeowners coverage (dropping the computer, having the plasma or LCD screen fall off the wall because of improper mounting). Furthermore, some possible usage can lead to limited coverage. (Business-use items are subject to internal and external limits.) And there some matters that the home-owners policy just does not properly address. (Devices may be covered, but data is not.) Deductibles are also a consideration for less-expensive but still valued items, like cell phones and music devices.
For some of these problems, astute agents realize there are valid noninsurance alternatives. "Whole house" surge suppressors are becoming more common and, depending on the price in your area, may in fact be the best solution. (Yes, those surge-suppressor strips you can plug your devices into are also protective, but show me a single person who has one for a dryer or refrigerator.) And by far the best protection for data remains regular back-up procedures, rendered even more practical with today's freely available (and increasingly inexpensive) portable storage devices, such as flash drives and external hard drives.
When it comes to love--whether of a kindred soul or a gadget--the implications are always the same: Love equals value. Value can be lost. Therefore, the object of love must be protected. Also, the greater the emotional (and financial) investment, the greater the need for professional, but also empathic and understanding, counseling.
So if love it is, put aside that sales and service mindset. Instead invite the smitten client to your office for consultation and reassurance. I can hear it now: "I only went to Best Buy for a cell-phone battery; I really wasn't looking for a new relationship. Yet, suddenly there she was-a 62-inch beauty with Bose surround sound. I can't explain what came over me, but since that day, we've been inseparable. Please say you can help me!"
Ain't love grand?
Chris Amrhein is an insurance educator and speaker with more than 30 years in the industry. He is also chief fun officer of www.insuranceisfun.com, where his newest book of insurance musings, "Yes, Virginia, There Is Insurance," is now available. Readers may contact Chris at chris@insuranceisfun.com.
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