"I hate to ask this," she began.
"Maybe I’ll hate to answer," I replied, "but let’s give it a shot."
"The neighborhood around our agency has changed considerably in the last few years. A whole new culture has moved in, and many of the adults don’t speak English. Do you know how weird it is to have parents applying for car insurance and their 12-year-olds translating for them?"
"And why does this worry you in the context of an E&O class?" I asked.
"Because they don’t understand what I’m saying! Worse, they are getting it through the words of someone else who probably understands even less!"
"You believe your E&O risk is greater because these folks don’t speak English?"
I had to laugh. "You know what your far bigger E&O problem is? Assuming the ones who speak English understand you!"
Ah, grasshopper, how many others have been led onto the E&O rocks by this siren song of "I’m sure they know what I mean" assumption? Permit me to share a recent incident confirming the error of our fellow agent’s assumption.
Good friends from our church (let’s call them John and Mary) pulled me aside and asked if I would help their adult niece (Louise) with some insurance purchase advice. Seems she was seeking a homeowners’ policy and had become somewhat confused over the differing information received from three agencies. As Louise lives some distance from here, we arranged a conference call. Louise read what she felt were the key numbers from the three homeowners’ "proposals" she had received. Included in her conversation were these "details":
- Company A would insure the home for $121,000. Company B listed $124,000. Company C stated $124,000, but also listed replacement cost of $155,000.
- A and C offered $500 deductibles. B listed $1000 (this only applied if they also wrote her car; without car, deductible was $2000). C also listed a $500 deductible for each property coverage, such as other buildings, personal property and ordinance or law ("whatever that is").
- All three had $300,000 for a top limit, but she couldn’t tell if that was in addition to the amounts in No. 1 or included it.
- Each had coverage for other buildings on her property, but none said anything about her garage.
- Company A included personal injury and Company B had an amount for identity coverage.
- A’s annual premium was significantly lower than either B or C.
After considering the information that Louise had provied, I asked her to send a physical copy of the proposals to her aunt and uncle, who would call me when they arrived for further review.
Let’s look at the evidence gathered so far. What have we learned?
- Louise has no clue what she is reading.
- Neither do John and Mary.
- These are not proposals, they are quote sheets: lists of numbers that are assumed to have clear meaning to the reader. Reality? See Nos. 1 and 2.
- I have no doubt the dwelling coverage for C is the same as B. The $155,000 is evidently what she may receive if the carrier’s proprietary "guaranteed replacement cost" endorsement kicks in. That endorsement will clearly pay up to 125 percent of Coverage A (do the math).
- Because there is no copy nor mention of that endorsement or policy provision on the "proposal," no one knows exactly when or how it will be triggered, so for now the $155,000 falls under the heading of "vaporware."
- Although C listed multiple deductibles, it is likely (but not certain) there is only one standard deductible per loss, and not a separate one per coverage.
- The $300,000 is her liability coverage limit.
- Her garage, if detached, is an "Other Building."
- Each company includes some additional coverages that the others do not—or maybe they just did not put them on the quote sheet.
- If price is all that matters, A looks like a slam dunk. Because she is still trying to decide which to buy, price is clearly not all that matters.
What don’t we know?
Answer: Anything needed to make the decision.
Three days later, I met with John and Mary to review their niece’s materials.
Sadly, I inform you that Louise had described them accurately over the phone. Basically three schedules of numbers, all titled as if the reader was an experienced insurance person with that company or only looking for the price at the bottom. The formats ranged from useless to dangerous to simply misleading. For example:
- That impressively low price for A? It had a footnote, which on the next page explained that figure assumed a multiline discount for agreeing to purchase auto and life policies at the same time as the homeowners’. No life? Add 5 percent. No auto or life? Add 23 percent.
- None of the three referenced a policy form. Are we to assume that all are ISO HO-3? HO-5? HO-2? HO-8? Totally proprietary?
- Only C provided coverage examples or explanations via a single attached sheet—and for some unknown reason, the sheet only referred to auto. No hint what any company meant by other buildings (her garage), personal injury, identity coverage, replacement cost or ordinance/law.
- C provided two entirely separate quotes, which appeared identical except for price. I found in the fine print that the lower quote was only if they also wrote the auto. Misleading? Bait and switch? Formatting error? I’ll leave that to you and your personal level of paranoia.
Consider again our fellow agent and her non-English speaking prospects. Can you now see why, from an E&O or other standpoint, she was probably better off? Because she would have to discard all assumptions about her new prospects possessing insurance knowledge, she’s more likely to make her explanations clear and concise, be willing to take the necessary time to clarify and respond to questions and avoid any shortcuts that may lead to misunderstanding or accusations of misleading/prejudicial sales tactics. In other words, exactly the opposite of what we found with the far too typical materials furnished to Louise.
I can hear many of you now. "This is why Louise needs to be dealing with a professional agent. She would have gotten her explanations, along with expert advice. This is a classic case of those direct writers trying to do it all over the phone and Internet!"
Only you’d be dead wrong. All quotes came from local agents. Note the reality: She reached for her phone to make inquiry; no one insisted she come to their offices prior to sending a quote sheet; each furnished quotes with no explanations of the obvious limitations and shortcomings, and each sent similar materials to others.
Louise clearly understood she was facing an important decision. When she became confused and uncertain, she called her trusted aunt and uncle. They, just like Louise, realized they were lost and turned to their trusted friend.
Note that none of the three turned to a trusted agent Internet site, an insurance carrier site or a local agent. When decision time came, each went to a trusted person and/or friend, not an insurance professional. If it turned out that friend was also an insurance professional, so much the better, but "trusted" and "friend" came first. So why was our E&O student surprised when her non-English speaking prospects, in moments of confusion, turned to their trusted child for a translation? It simply confirmed they were taking the situation seriously.
Let’s sum up:
- Never assume your prospects and clients understand anything about insurance until they prove otherwise.
- The burden is on you to clearly explain coverage and value, because you’ll likely be the last person insureds consult about any remaining doubts or confusion weighing on a final decision.
- Speak their language, not yours. Your value lies not in simply knowing coverage details, but helping untrained others understand the why’s and how’s of choosing the best for them.
- Get rid of those quote forms and offer real proposals, with sufficient explanation and detail to allow reasonably intelligent people to make valid decisions. Added bonus: Clear and informative proposals make it less likely they will consult with others prior to making a decision.
- Clarity, caring and consistent value of advice—not data—builds trust.
Your ultimate goal? That one day you will be that trusted friend they call.