In the landscape of wealth management, some elements are, for lack of a better term, sexier than others. Both financial planners and their clients are often drawn to more complex topics, especially those that seemingly pledge to make or save a lot of money. And while those strategies are valid, if not vital, for exploration, others have been relegated to commodity status and are given very little attentionโlike property and casualty insurance, better known as home, auto, and liability insurance.
As for why these foundational risk management tools are often ignored, Iโd posit that we are required to have these policies in place to own a home or drive a car detracts from their allure. (We donโt like doing things someone else tells us we have to do.) Or perhaps itโs because the insurance industry has marketed these products as commoditiesโitโs all about price, right? (15 minutes can save you 15%, or so Iโve heard.) And it likely doesnโt help that our general perception of insurance agents is that they care more about the sale of a product than the consumer who owns it.
But while it may be true that most of us donโt like to feel sold, a good property and casualty agent could add more value to your financial plan than you likely thinkโand in ways that you might not expect.
For example, I recently bought a new house, and before the sale closed, I checked in with a friend and colleague who specializes in home and auto insurance. While I am well versed in homeownerโs insurance and cognizant that I need to focus on the coverage first and the cost second, I was still ostensibly trying to see how little I could pay for it. But after she collected the information she needed to provide me with quotes, she returned with intel that I didnโt expect to get:
โThe reports are showing that there was a water damage loss in the past 6 years at the new home. Was this disclosed on the sellersโ disclosure statement? If so, what are the details of what happened and how the loss was mitigated? We can see below that $44,229 was paid,โ she wrote me.
She continued, โThere appears to have been a wind claim in which $35,479 was paid. What are the details of what occurred? I am wondering if they may have had a new roof installed.โ
Thank goodness the home sellers had really good answers to both of these queries, so while this new-to-me information didnโt blow up the deal, it made me a much more informed homeowner.
Even though Iโm trained to understand home and auto insurance as a CERTIFIED FINANCIAL PLANNERโข practitioner and previously held a property and casualty insurance license, this was not the only new information that a great agent was able to share with me about the intricacies of current carriers and the unique wrinkles in their policies.
So yes, this is my encouragement to ensure that you have a true specialist and expert guiding you in matters of home, auto, and liability insuranceโand that you exercise sound judgment when receiving that advice, because getting the cheapest coverage you can find and putting your head in the sand, hoping you wonโt need the insurance, is not a strategy.
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