Reading Insurance Policies Can Be Profitable

Reading Insurance Policies Can Be Profitable

A long-term client of mine went through a horrible experience earlier this year.

Their bookkeeper stole a significant amount of money from them over several years.  To add insult to injury, there was a slim chance they would ever recover any of the money.   As you might imagine, this violation of trust caused a great deal of emotional damage, even though their lifestyle wasn’t in jeopardy.

The bank, insurance company, and accountant were contacted; all in an effort to uncover any possible way to mitigate the loss.

Shortly thereafter, I happened to receive my client’s insurance renewal documents in the mail.  For this particular family, they wanted all of the paperwork that was generated by the insurance company to be sent to our office.

Now, you need to understand, a routine part of our financial planning process with clients is to review their insurance coverages, including home and auto.

Reading an insurance policy is somewhat akin to going to the dentist for most people.  It is hard to do because the insurance companies don’t make it very easy.  They pack policies with foreign terms, lengthy definitions, and exclusions; enough to put anyone to sleep.

Anyway, I am scanning the policy and looking at the coverages (call me crazy).  Lo and behold, I came across a section titled, Fraud SafeGuard Coverage.

Interested, I kept reading.

The policy provided identity theft coverage.  I called the insurance broker and confirmed the coverage would apply to this case.  It was not sufficient to offset the complete loss, but my client got a $62,000 check several weeks later.   Not a bad outcome under the circumstances.

As it relates to insurance, this unfortunate fraud case reminded me of a few things:

 1) Reading the fine print of your insurance policies is important to do periodically; maybe not every renewal, but at least every other year.

2) Don’t rely completely on your insurance agent or broker to alert you to key coverages.  A proactive insurance broker or advisor will schedule regular meetings to review coverages with you and give you the chance to ask questions.

3) Insurance policies are updated and changed regularly.  This can mean a specific loss might not be covered one year, and then, be covered the next.  This was the case for my client.

4) No matter what the loss, don’t forget to call your insurance agent or broker to explore whether you might have some coverage.

John Christianson
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