How one tiny omission nearly cost Sandy her business

 There is no such thing as too much information for your broker

How one tiny omission nearly cost Sandy her business

“Jenna the Bangalow shop burnt down this morning …. I’ve lost everything….

Stock, fittings, the lot and there’s no way I will be able to re-open out of there anytime soon as I just found out the building owner is not insured”

“Sandy, relax… we’ve got your stock and fittings covered at $25,000…. and business interruption will cover your lost income until you have new premises.

“Jenna …… I had more than $50,000 of stock in there”

…. silence and a mumbled “f***”.

We’re not mind readers

Sandy Matthews started with her new broker in August 2019. As part of their process the broker undertook a deep discovery process.

But in answering the questions, she missed one crucial detail.

Her retail business operated out of two separate locations 22km apart, Mullumbimby and Bangalow. At the close of business every Friday afternoon, Sandy would move $30,000 of stock into Bangalow.  To take advantage of the weekend tourist trade.

However, she was only insured for static stock at each location, with fixed valuations. Not mobile stock and variable valuations.

She had not told her broker of the unusual practice of moving large values of stock between her stores on a weekly basis.

On the face of it, Sandy was under insured by around $30,000. Nor could she afford to write of $30,000.

Her business was at stake.

The devils in the details

At that point her broker would have been entitled to say bad luck. You didn’t tell us and so sorry we cannot help.

But there are those insurance brokers who have their customer’s best interests at the heart of what they do.

Jenna just rolled up her sleeves and got to work. Spending hours poring over every written line in all her business insurance policies. Searching for any potential additional clauses that could be leveraged into extended coverage for her.

Then more hours strategizing with colleagues about the best approach for submitting the claim. And finally, the real fun. Negotiating with the insurers on behalf of Sandy.

Eureka

It is important to have good coverage with good insurers. A policy with extended wordings and broad additional benefits may initially cost more but it can give your broker the wriggle room they need, to help you out when you most need it.

Through an extended endorsement, Sandy had a further stock benefit at other premises to the value of 20% of the total stock insured.

Within 4 days of the fire, the insurer had agreed to apply this extension.

Sandy’s business was safe. And for the first time in 4 days she was able to sleep more than a few hours.

Lessons

1.       Choose your broker with care. Listen to their questions.

a.       Are they being thorough?

b.       Do they explain everything? What you are covered for, and what you are not?

c.       Are they professionally qualified? And do they have you best interest at heart?

Because when the chips are down, will they be on your side, fighting for you.

2.       Tell them everything about your business, even stuff they don’t know to ask. It’s up to them to decide what is important. But it could be critical.

3.       Beware of cheap. It always means the insurer is leaving stuff out. Take advice and then decide.

* Name of the owner and exact location of business have been altered to ensure client confidentiality.

Insurance - Why do people hate it?

When I landed my first insurance job 15 years ago I was so excited but, I have to be honest, I was a little embarrassed to tell people. After further investigation of why I was feeling like that, I realised – people hate insurance.

Most people I talk to think it’s too expensive, don’t like it, don’t really understand it and don’t see any benefit unless they suffer a financial loss.

I felt this deserved a bit more thought and I came up with my top 3 reasons.

Why people hate insurance – my 3 reasons

It is intangible and invisible

So when you purchase insurance cover you get your policy documents. You also get things like financial security and peace of mind but you cant see that. When you buy a new car, iphone, furniture or any other tangible item you get to be excited about your purchase. Driving around in your new car, sitting on your new couch and checking your new apps on your phone. How can an insurance policy compete with that level of excitement?

Insurance is complicated

Definitions, exclusions, endorsements, conditions – Why is there so much information to go through? What puts you to sleep more than reading through policy documents? Welcome to snoozeville. Then after navigating all of these documents you are still not confident you entirely understand.

Lack of trust in the insurance industry

People seem to believe that the insurance industry would do anything to get out of paying a claim. This view could be just paranoia or based on past bad experiences they may have had. Stemming from lack of service from an insurer or maybe from having a bad experience at claim time and feeling unfairly treated.

Lets turn this around – the positive news

In contrast to these points, I see the critical importance in having the correct insurance products in place and have seen many lives and businesses being able to bounce back from catastrophic events, large and small, because they have had the right insurances in place.

Also, out of the many insurance professionals I have met over the years I have found the majority to be hard working and honest, always doing what is in the best interest of their clients. Leaving the small minority to ruin the credibility of the industry.

You don’t buy insurance for fun or for self-actualisation. Insurance is purchased for financial protection and survival. The secret is to make sure you get the right help to make sure you know what to expect at the time of a claim. You can do this by consulting an insurance broker to work on your behalf so you can be sure you are being treated fairly.