Financial planners are infamous for using strong sales tactics regarding insurance products.  Most of them make a nice living on the commissions that come from these sales.  The commission throws up the red flag that there is a conflict of interest.  Sometimes there may be cause for concern.  However, insurance is a necessary evil to protect against loss.  My company does not sell any products or accept referral fees or kickbacks.  It is important to make that distinction as I am about to write about the need for insurance without an agenda.

Property and casualty (P&C) insurance is rarely discussed.  Most clients have coverage, which is a step in the right direction.  Unfortunately, it is usually the cookie cutter policy rather than a customized insurance plan specific to the client’s risk exposure.  In the case of P&C insurance, the relationship most clients have with their agent is practically non-existent.  Interaction usually occurs only if there is a claim.  Otherwise, the client receives the bill, reviews the premium from the previous year, writes the check and continues with the same coverage for the next year.

Finding an agent who represents multiple companies is important.  One company might be more willing to give a break on a certain risk exposure than another.  Having a choice can lower your premium.  Please note the distinction between finding an agent to discuss your choice of insurance companies rather than just comparing price quotes.

It is also important to be aware that even the maximum limits on the traditional coverage might not be adequate.  An umbrella policy can be used to supplement traditional coverage.  Unfortunately, umbrella policies are becoming necessary in our litigious society.

According to Mike Gautreaux, a partner at AI Insurance Group, the most important thing a client can do to be adequately covered is to review their coverage annually.  It is important to have a meaningful dialogue with your insurance agent to be sure all changes to the client’s risk exposure are considered.

Not only do I encourage my clients to follow this advice, I too have benefited from these types of meetings.  Recently, I saved hundreds of dollars a year on my homeowner’s just because fire hydrants have been installed near my home.  If I did not have a good working relationship with my agent, it is unlikely that I would have realized this savings.

The recurring theme of my advice is to work with a professional who comes highly recommended, who has proper credentials and with whom you feel comfortable.  It is likely that you already have coverage and an agent, but it never hurts to get a second opinion.