Property and Casualty
Why Being Honest with Your Insurance Agent is Important
By: Insurance 321
Insurance agents are a vital resource to helping businesses understand the potential risks they face in their day to day operations. Because commercial insurance involves complex concepts and requirements, business owners can depend on insurance professionals to give expert advice on just what is needed to fully protect a company from lawsuits and claims.
But insurance agents are only able to provide the best assistance and advice when clients are completely honest and upfront with the information that they provide.
When purchasing commercial coverage, insurance companies require details including information about business ownership, location, employees, payroll and sales. Some business owners may think they can obtain better premiums if they fudge a little about sales or payroll figures. Others are not aware of the importance of providing accurate information to receive the best quote possible. Whatever the case may be, being honest with the agent will ensure that the insurance company has all the information it needs to accurately assess the business and come back with the best protection and pricing for the risk.
Without accurate information, an insurance company cannot determine the best price or policy for a company. It is in the owner’s best interest that all information provided is truthful and accurate so that the proposal and pricing that comes back is also accurate.
The consequences of not being honest can actually hurt companies in the long run. If a claim is made against a business policy and the insurance company finds out that the information supplied was not complete or honest, they can deny the claim.
For example, let’s say a company purchases fire insurance coverage. At the time of enrollment, the owner learns that the insurer gives preferred rates to companies with fire safety equipment installed. The owner tells the agent they have fire extinguishers, automatic sprinklers and a safety program in place for worker evacuation. In actuality, the company does not have any fire safety equipment at all. A year later, a fire destroys the building, and the company files a claim against the policy. When the insurer finds out that false information was given about the fire equipment, they have the right to deny the claim. The owner would not receive any payment to replace the building.
While this is an extreme example of not being truthful with company information during enrollment, it illustrates the point that insurance companies require completely accurate information when they offer coverage. They have a fiduciary responsibility to provide coverage to clients but only if the information they obtain is truthful. Also if an insurance company learns additional information during the policy term, they have the option to re-price the policy to reflect the true facts.
Being honest with insurance agents saves everyone time and frustration in the long run. Pricing is accurate and any claims filed will go through smoothly without issues. Potential lawsuits will not uncover new facts that could affect or even void coverage leaving business owners having to pay for claims out of pocket. In the end as the old saying goes honesty is the best policy and will ensure that all is well with a company’s insurance protection…and conscience.