5 Hints for Policy Comparisons

A few weeks ago, we got a question in through IJPro. The agent was asking about the wisdom of having a customer change from a dwelling fire type policy form to a commercial property type of policy. Of course, my first inclination was to simply tell them that I thought that a commercial property policy would be better. That was my gut reaction. Of course, I didn’t go with my gut reaction. I asked a couple of questions and spent the next few hours pouring over forms to find out that my gut was right (within some limitations.) That did make me think that you might have a similar question. Before you send it to me, I thought I would help you by telling you about my process for comparing policies. Give it a try and if you have any questions, by all means, give me a shout.

Make sure you know which policies you are comparing.

There’s a big difference if you’re asking me to compare an ISO DP-3 to an ISO CP 00 10 or if you’re asking me to compare a carrier specific DP-3 (or state specific DP-3) to an ISO CP 00 10. I need to know what endorsements might be modifying the policies in question. I really need to know the edition dates of the policies. All of these details make a difference in making comparisons because every edition of every policy has differences. They may look huge or they may look small, but they’re usually significant in some way or another.

Knowing the specific details of the policies in question helps us to fully and accurately compare them. Think about it like this. What if your customer had a property written on a DP-3 with a personal liability endorsement attached and she was considering converting to a commercial property policy, what’s the big glaring hole that you have to advise her to fill? If you didn’t say get liability coverage, we need to have a conversation. Yes. It may seem obvious right now while we’re thinking about it, but that’s a real issue because the customer may not think about the liability component of the DP-3 policy, but you have to.

Make sure that you compare the definitions.

Here’s a simple one, comparing some parts of a state-specific dwelling property form and parts in an ISO commercial property form.

From the dwelling property form…

In this policy, “you” and “your” refer to the “named insured” shown in the Declarations and the spouse if a resident of the same household.

From the commercial property form…

Throughout this policy, the words “you” and “your” refer to the Named Insured shown in the Declarations.

Did you notice the difference? On the dwelling form, the definition of “you” is different than the definition of “you” in the commercial property form. Remembering that the insured is the same person on both forms, we immediately find a difference in coverage. We have redefined who is insured. Does that make a big deal? I don’t know, did the customer’s spouse get named on the policy? If not, it might make a difference. This is why we check these things.

Make sure you compare the coverages provided.

From the dwelling property form…

COVERAGE D – Fair Rental Value

If a loss to property described in Coverage A, B, or C by a Peril Insured Against under this policy makes that part of the Described Location rented to others or held for rental by you unfit for its normal use, we cover its:

Fair Rental Value, meaning the fair rental value of that part of the Described Location rented to others or held for rental by you less any expenses that do not continue while that part of the Described Location rented or held for rental is not fit to live in.

What about the ISO commercial property policy?

Here’s the thing; unless you get the customer a Business Income, without Extra Expense Coverage Form, a gap between the two policies will exist. Is it possible that the customer doesn’t care about this? Maybe they can survive if the rental home is damaged and can’t be rented out? That’s great. It’ll save them money. But if you miss telling them that there’s a difference here and don’t recommend that they take steps to close the gap, you might be dealing with this issue again later.

Make sure you compare the conditions.

When you compare two different policies, the conditions may be identical but it’s more likely that they’re not. I urge you to look at different conditions. You should consider how coinsurance applies on a personal property policy (like a dwelling property policy) and how it applies on a commercial property policy. There’s a difference and it can be significant.

Make sure you compare causes of loss.

Many personal property policies will provide open peril coverage for the dwelling and other structures but named peril coverage for the personal property. Many times, a commercial property policy includes one causes of loss form as part of the policy. You have to make sure you’re aware of what causes of loss apply to what property. Paying attention to that little detail may help, or harm the customer, when they have a loss to covered property.

There are more items that you need to consider, including what the exclusions look like, what endorsements you can get to cover any gaps that arise if you end up making the transition, is the property accurately valued and more.

What sounded like a simple question when this whole conversation got started turned into a multi-hour project. It’s a good thing that I enjoy reading insurance policies, otherwise that wouldn’t be much fun. Isn’t usually the case that when you thought you would get an easy answer, you got a lot more than what you bargained for?


5 Things Not to do This Thanksgiving

A burnt-to-a-crisp turkey served along a side of political discourse is just one potential disaster your insureds might face this Thanksgiving.

Help things go without a hitch by sharing these quick tips.

1. Don’t drink and drive

This should be a no-brainer, but drunk driving still causes 28% of all traffic-related deaths in the U.S. according to the Centers for Disease Control and Prevention. Arrange a designated driver or use a ride-hailing service when traveling on Thanksgiving.

2. Don’t loan someone your car
Be mindful about who drives your vehicle. It’s easy to give a friend or family member keys to the car while they’re in town, but this “permissive use” leaves the insured in the driver’s seat when it comes to responsibility for a claim.

3. Don’t serve alcohol to minors
Under social host liability laws, party-givers can be held responsible when minors drink, even if the hosts were unaware that they were doing so. If a minor was drunk, chose to drive and caused an auto accident, the host could be liable. Keep a watchful eye during parties and be sure guests who imbibe are 21 or older.

4. Don’t subject your pets to holiday stress
Pets can be easily overwhelmed by visitors during Thanksgiving; the extra noise and activity can be upsetting and people often aren’t educated about how to act around animals, which can result in unwelcome behavior by both the person and the pet. Give pets a quiet “sanctuary” behind a closed door, complete with a bowl of water, comfy blanket and special treat. They’ll be grateful.

5. Don’t leave tools laying around
Tackling winterizing to-dos is a top priority this month, especially with house guests on approach. Be sure shovels, rakes and ladders are kept well out of the way to avoid slip-and-falls and store them properly after use.

Your clients depend on you to tell them about the coverage they need.

By taking 3 minutes to give them a personal umbrella quote, you’ll show them how this indispensable policy can help protect their assets and pay for medical and legal expenses should the worst happen, whatever the season.

About Daina Kawchack Smith, Chief Marketing Officer,
Daina Kawchack Smith is a respected leader in the field of personal umbrella insurance. With over 24 years of experience in the insurance industry, Daina brings a breadth of experience to help agents grow by sharing innovative ideas. Before being named chief marketing officer at, Daina was an independent agent, CSR and an underwriter for a Fortune 500 wholesaler. She is a licensed Nevada agent and holds a CISR designation.


Insurance Research Finds Many Homeowners Don’t Understand Deductibles

Almost five years after Superstorm Sandy, one third of homeowners in several coastal states are still unaware of hurricane deductibles and how they work, new insurance research has found.

Not only did 33 percent of respondents say they had never heard of these deductibles or were not sure what they were, one quarter of respondents lacked an understanding of deductibles in general.

The Insurance Research Council (IRC) released its poll results as the National Oceanic and Atmospheric Administration projects two to four major hurricanes this hurricane season, which lasts from June 1 through November 1.

Homeowners in New Jersey, North Carolina, South Carolina, Florida and Texas were asked whether they were familiar with hurricane deductibles, which is a higher deductible found in homeowners insurance policies that applies when a hurricane occurs.

“The findings from this survey suggest that ample room exists for educating homeowners about a key feature of every homeowners insurance policy—deductibles,” said Elizabeth Sprinkel, senior vice president of the IRC. “The need is especially acute as the 2017 hurricane season gets underway and insurers hope to minimize post-event misunderstandings with their policyholders regarding deductibles.”

Hurricane deductibles were a prominent issue in 2012, with misunderstanding and confusion due to the fact that Sandy did not make landfall as a hurricane. These deductibles, which became more common after insurers suffered heavy losses from Hurricane Andrew in 1992, are often calculated as a percentage of the insured value of a home — another concept the IRC survey found unfamiliar to homeowners.

One in three respondents with percentage-based hurricane deductibles did not know or were unsure of the percentage applicable to their deductible, and four in 10 did not understand the basis for calculating the deductible. One in four respondents incorrectly thought the percentage was applied to the total amount of their claim.

The survey also found that the level of understanding of hurricane deductibles varied across the five states studied. Compared with respondents in the other states, New Jersey respondents demonstrated the lowest level of awareness and understanding of several hurricane deductible issues, despite the fact that about 346,000 homes in New Jersey were damaged or destroyed by Sandy.

The report, “Public Understanding of Hurricane Deductibles, Need for Consumer Education Persists,” is based on an online survey conducted by GfK Public Affairs & Corporate Communications on behalf of the IRC. A total of 1,047 homeowners were surveyed – 200 or more in each of the five states studied. Only homeowners living in selected counties where the home involved was their primary residence and with insurance coverage purchased exclusively from private insurance companies were included in the survey.