6) The good, the bad and now it gets ugly!
Everyone who's seen a western is familiar with the classic showdown. Two gunslingers stare each other down on a dusty, tumbleweed-strewn street, fixing to settle their differences as the townspeople scatter in fear. Such is the situation when an auto insurer and a homeowners carrier can't agree on who should cover a claim. Perhaps the form's language is unclear. For example, think of the convoluted language in policy forms pertaining to coverage for CDs and DVDs, or to negligent entrustment. Maybe there's a simple disagreement over which policy is applicable. (If Mike gets drunk at Mary's house and then negligently hits someone while driving his car, is Mary's possible liability covered by her auto or homeowners policy?) The insured may feel like a bystander at a shoot-out. The real victim may be the policyholder's peace of mind.
Now add an umbrella policy to the mix, possibly from a third carrier, and things really get interesting–or more disheartening, depending on your point of view. Instead of the classic mano a mano showdowns from "High Noon" or "Silverado," we have the climactic three-man face-off from "The Good, the Bad and the Ugly." Dramatic? Yes! Desirable from where the insured is standing–i.e., smack in the middle? No! Whether two policies are involved or three, the simplest solution is a single adjuster handling the entire claim, and that's only possible if a single carrier issues all applicable policies.
Granted, a single carrier sometimes assigns more than one adjuster to a multiple-policy claim, but I'd still argue the single-carrier solution is best. Let's call it the bookkeeping factor. If a single carrier writes all three policies, it knows any covered claim is coming out of its pocket. While there may be internal issues over how that payment will be charged, there is no opportunity to lay part or all it off on another insurer. No matter how it pushes the lima beans around on the plate, the carrier knows it's ultimately going to have to eat them. And the insured knows this too.
5) Limits locked like Legos!
Given all the construction toys that have come and gone from children's playrooms over the past 50 years (Erector Sets, anyone?), what has allowed Lego blocks to remain so steadfastly ubiquitous? Sure, the company keeps coming up with ever-fancier kits and themes, but the key to its success is that its blocks simply work. A child of any age can pick up two, 10 or thousands of Lego blocks and be certain that he or she can stick them together into stable structures without an adhesive.
Many toy-block companies have tried to copy Legos' success, yet in my experience one thing always spoiled the soup: Their blocks never fit together anywhere near as tightly and seamlessly as Legos. And, trust me, when you're assembling a several-thousand-piece replica of a space shuttle with your six-year-old, those little imperfections turn into big-time hassles, mismatches, tears and ultimately tantrums that would send that creature in "Alien" running for its life. And, for sure, you can't blend the other toy-makers' blocks into your Legos set.
Like the block-makers, insurance carriers create their policies with subtle or not-so-subtle differences. While they claim their policies jibe with those of other insurers, in reality they don't fit snugly enough to eliminate all the potential gaps. The more coverage you add, the greater those gaps can get. Soon the entire assembly is at risk. Particularly when umbrellas are part of the mix and the intent is to provide significant liability limits, learn from Legos: A perfect fit can be ensured only if all the pieces come from the same factory.
4) Love is never having to say "non-concurrent"!
While many think non-concurrency–a scourge that can arise whenever an insured has an umbrella policy and underlying coverage–has been tamed by technology, it continues to rear its ugly head. Assuming no insuring clause triggers non-concurrency issues–it seldom does in personal lines–the key potential for pain and anguish arises from the saddest of all agency errors: simple oversight. When the underlying policies aren't tied directly to the umbrella, an agent may change the underlying policies (reduce limits, add or delete autos, revise insureds, add or delete coverage endorsements) in a way that could significantly affect the umbrella's coverage or put the underlying policies out of compliance with the umbrella's requirements. In such cases, insureds may find at claim time that they now "self-insure" a significant amount of a risk they previously thought was covered in full. And that's the good news! If the underlying coverage's failure to meet the umbrella's requirements is severe enough, the umbrella carrier may decide to declare its policy agreement void and not pay anything at all.
There's always a risk of non-concurrency between an umbrella policy and an underlying policy. There's far less risk when a single insurer provides both. The carrier's underwriter may even take the lead in bringing all the policies into alignment. And although there's no guarantee the single carrier's software will automatically catch changes to underlying policies that may affect the umbrella, the chance of an error is a lot less than when multiple carriers are involved.
3) Less is definitely more!
In the March 2007 issue of Burand's Insurance Agency Adviser newsletter, fellow American Agent & Broker columnist Chris Burand made a sparkling argument for why agencies often greatly overestimate the number of carriers they need to write business effectively. Chris also pointed out that not only do agencies not gain much by representing more carriers than they require, but they also are unlikely to give any of them enough business to make them very happy. By dividing the same book among fewer carriers, an agency probably loses nothing in market capacity or its own capabilities, but it greatly increases its production per carrier. That significantly improves its carrier relationships, along with its odds for financial success.
One way to start down this path to a happy future is to consolidate coverage with one carrier whenever possible. The agency simplifies workflows and increases profits, while the insured gains all of the advantages on this Top 10 list. Can you say win-win-win?
2) "You Say Potato, and I Say Potato."
So let's call the whole thing off. That old standard is a great song, but notice it doesn't make a lot of sense when you see it in print. You have to hear it to get the joke.
Every day, insureds learn that common words may mean different things to different insurers. The meaning of key policy terms like "business," "collision," "animal," "entrustment," "premises" and "intentional" may seem clear enough to insureds, but all too often is debatable among carriers. The sheer number of court cases litigating such terms is mind-numbing, confirming the potential for such conflicts to turn up at just the wrong time–when a claim is made.
While two or more carriers may disagree in good faith on the precise meaning of a term common to their policies–and even end up in court–your clients avoid such headaches when their personal-lines policies are provided by the same insurer. Even if the insurer and insured disagree over the meaning of a word, the dispute will only have to be settled once.
Finally, we come to the No. 1 reason your insureds should have their auto, homeowners and umbrella insurance with one company:
1) Your field rep will buy you lunch!
Yes, little things still count. There's nothing like a free meal to bring a smile to anyone's face–and if you're smiling, you're happier. Just as my kids learned that a happy parent makes life a lot more pleasant, insureds learn a happy agent makes doing business more pleasant. And when the business is insurance, "pleasant" is a wondrous word.
Now get out there. Your free lunch is waiting!
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@insurance- isfun.com.

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Policy Issues: More reasons to consolidate personal-lines coverage

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