Commercial Use

Quite often, I have just grabbed the keys to my car and used it for work stuff. After all, it was easier and I could be reimbursed for the mileage, so it wouldn't cost me anything... and any place other than 8 miles up a dirt road, it might even make me some money.

My insurance guy kept telling me that my insurance policy had a "clause" that prohibited work use. What I've come to learn is that it actually means: "We won't cover you if you... you're on your own because it's either best insured elsewhere - or you should be paying more for that coverage."

If you've got a work exclusion in your policy (like I do) and you do use your vehicle for work stuff (even if it's just errands or picking someone up from the airport), you might not be covered. You're essentially "retaining" your risk... willing to pay for the damages if something happens. But there are ways to solve that... it just depends on your situation and the company's policy.

A break from the tedium

I've been working on submitting applications for organizations with multiple locations and multiple buildings. It's amazing how much paperwork it takes to submit an application. Today's package landed at around 50 pages – and I haven't even looked at "really complex" organizations yet.

In the mean-time, I've learned a little something about a couple of my more well-advertised competitors on auto insurance... and now they are promoting homeowners and renters insurance. Let me 'splain... no, let me sum up:

There are a couple of steps to the insuring process. An agent or broker (like me) has the responsibility to do due diligence and collect all the necessary data for the insurance company. Based on that information, we are able to provide a price for you to consider. Since we miss something from time-to-time, the second step (after you have committed and paid money) is for an underwriter to review the information and look for things that will raise additional concerns. Enough additional "risk" can actually raise your rates just a couple months into your policy.

A guy recently discovered that the "15%" he thought he saved turned out to be a 50% increase when the underwriter was finished discovering his two live-at-home teenage daughters with at-fault collisions... questions that the agent neglected to ask in the initial discussion. Would you be a little irritated, too?

Yeah, But We Can't Avoid ALL Risk

It may not make sense to avoid the risk of owning an automobile. But you might assume that you're a safe enough driver – and you choose to retain the risk that you'll run into something. As a result, you choose to not purchase collision insurance. This option is retention. You choose to retain the risk.

How Can We Deal With Risk?

There are a number of different ways to deal with risk. The most costly is usually to buy an insurance policy. But, that's only helpful after the barn's burned down. So, how else do we deal with risk?

Well, we can completely avoid whatever "it" is. That is a novel concept to me. It's like I've been living under the assumption that injury or pain was just a part of living life. But, now that I'm thinking about it, there's a whole lot more to risk than pain. Pain's like a 3 or 4 on the Risky Scale of 1-10. 

I love going outside in lightning storms. I don't know why, I just do. But my wife understands the risk and chooses to avoid going outside all together when there's a chance of lightning. 

Or, consider your propensity toward driving on New Year's Eve... your choice. It's higher risk than New Year's morning. 

What other risks can we avoid? Owning an automobile. Having dangerous pets. Having people over to our house. Using the fire place. Walking on a roadway. Getting out of bed. Slapping a bear... you get the idea. 

Is This Risky?

While I am a perpetual optimist, my wife seems to bring good balance to our relationship. I assume my kids will learn if they fall off something and hurt themselves. She assumes (1) that they will fall, and (2) that they will hurt themselves, and (3) the injury will be really bad, and (4) it'll probably be really costly, and (5) we'll have to add more money to the (still conceptual) counseling fund to help them deal with the long-term issues.

I think she innately understands risk, while I have to work at it. 

So, what's risk? Well, for anything we do, there's a chance that something bad (or undesirable) will happen. Wake up in the morning, open your eyes, and it all begins... well, "it" actually never stopped. 

My wife has fears (for good reason, having grown up in the Caribbean) of hurricanes, drivers on icy roads, being bit by a spider at night, putting her feet in her shoes and finding a centipede... not much nicer than fearing a scorpion. 

So, when I'm asked if it's risky to do something, I'll often reply that "risky" refers to a scale... and it's much easier to measure "risky" on a scale of 1 to 10. That scale should probably be the multiplier for how much money I put in the counseling fund.

Policies are Contracts

Contracts need to be very detailed and specific... that's probably why there are so many lawyers.

I'm on a steady diet of reading commercial contracts and eating M&M's and I've realized that there are lots of things that are unclear in insurance policies. It seems that there are some companies that are less clear than others. Whether it's by design or fault, the ambiguity can lead to lots of heart-ache when there is a claim. The insurance company will specify what they will or will not pay for. If it's unclear, the matter should be cleared up before there's an emergency... at least to be correct in our understanding.

Insurance companies do make a profit. They probably don't do it by paying claims...

Breathing a sigh of relief

I was talking with some friends at a picnic today. After a few questions about my new endeavor, they expressed relief that I wasn't planning to hit them up to become customers. Interesting response. I'll need to find out more of what was behind it.

Risk... and markets

The term "market" is often used by insurance agents, referring to insurance companies, and I've wondered why for a long time. In the common mind-set, I as the consumer often assume that I am "buying" insurance. Thus, I would be the market for the insurer in the most common "consumer's" perspective.

However, if we look at this from a "risk" perspective, I am actually asking the insurance company to take on my risk for a price (premium). Essentially, I am selling risk... and I've got to find a market for that risk. Fortunately, the insurance industry specializes in putting the two markets together.