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Why One-Size-Fits-All Homeowners Coverage Isn’t a Good Match for Affluent Clients

Customers who own a home with a replacement cost above $500,000 may have unique coverage needs. Learn why mass-market homeowners coverage may not be the best fit for these accounts.
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Independent agents probably know better than anyone that the protection offered by insurance coverage is not one size fits all.

Also, insurance coverage shouldn’t be stagnant. Over time, a client’s coverage needs may change, or they may need higher levels of protection. In some cases, clients may need entirely new products for both protection and peace of mind.

However, consumers are not insurance experts. All too often, they lack the expertise and nuance required to create insurance solutions that offer the highest level of protection.

For example, imagine a customer purchases mass-market homeowners coverage when they buy their first home. Over time, they move into larger, more customized homes, grow their family and purchase toys like motorcycles, boats, or RVs—but they never update their coverage. They may not realize that their risk profile has outgrown the protection offered by their one-size-fits-all, mass-market policy. This leaves critical coverage gaps that could create large, unexpected expenses and leave them unprotected.

Mass-market Coverage May Not Offer Adequate Protection

A mass-market homeowners policy may suit a new homeowner in a small starter home. However, it may be insufficient to cover losses to a home with a $500,000-$3 million replacement cost.

These homes are often unique, with custom finishes, antique or one-of-a-kind furnishings, or even historic elements that aren’t covered in a mass-market homeowners policy. If a customer must rebuild their home after a loss, the additional expenses may exceed the Coverage A amount. Coverages like extended dwelling coverage and building ordinance or law coverage will help ensure that customers with this type of homes can fully rebuild after a loss and maintain their home’s personality and unique charm. 

Homes with higher replacement costs are not only unique dwellings, but the properties are usually personalized with landscaping or mature plantings. When these are damaged during a storm or other loss event, a mass-market homeowners policy may not offer enough coverage to remove the debris and cover the cost of replacing the original landscaping.

Additionally, these customers may have valuable property items in their homes, such as art, jewelry, custom furniture or collectibles that exceed the limits on mass-market homeowners policies or are even excluded on more generic coverage. A homeowners policy that is designed  to cover losses to valuable possessions, like Safeco Premier™, offers the highest level of comprehensive coverage to give these customers peace of mind that they will be protected, even in the event of the unexpected.

IAs Are Uniquely Positioned to Ensure That Affluent Accounts Have the Best Protection

A customer with an affluent account may also be active in the local community, serve on non-profit boards or host events in their home. They may also have multiple homes or specialty vehicles.

These customers need the ease, choice, and advice of an independent agent who can identify gaps in coverage or areas of a customer’s life where they are exposed to risk. An independent agent can have an informed conversation with a customer and create a customized solution to offer holistic protection, ensuring that the customer’s hard-earned life isn’t left open to unexpected risks. 

Interested in learning more? Learn how you can grow your agency by expanding into the affluent market.


Sunday, August 2, 2020
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