This article was originally published in Independent Agent.
With continued pressures from the coronavirus pandemic and changing weather patterns following us into 2022, scheduling meetings with your personal lines customers may be more important than ever. Whether it's reviewing relevant life changes, understanding how the pandemic has impacted individuals and families, or simply discussing coverages they may need going forward, an annual needs assessment is a great opportunity to showcase the experience and value your agency brings to your customers.
As you prepare for these conversations, here are five questions you should plan on asking:
1. Have you made significant improvements to your home or are you planning to?
The Hanover's 2021 “Home Renovation Report" found nearly 70% of homeowners had plans to improve their homes over the next year. That's not surprising, given the increasing amounts of time people have spent at home due to COVID-19.
As a result of the pandemic, many homeowners added study spaces for remote learners, offices for remote workers, updated family rooms, expanded outdoor gathering spaces and more. These kinds of upgrades—in addition to kitchen or bathroom renovations, installing a deck, building an addition, finishing a basement or updating a cooling system—can all impact insurance coverage needs. Significant home improvements should prompt homeowners to reassess the coverage A limit of their homeowners insurance policy.
The report found of those who made major home renovations during the pandemic, 40% failed to contact their insurance agent to ensure their coverage reflected the home's updated value, making it important you proactively ask your clients about any changes.
This also is a good time to ensure the home is covered at its replacement cost. Should it ever be a total loss, most homeowners will want to be insured for the cost to rebuild. This is especially true given the recent increase in labor and material costs. With an increase in a home's replacement cost, agents may want to consider whether a customer should be moved to high-value home insurance protection. Coverage designed for customers with more complex insurance needs can offer more value, added benefits and customized protection.
Beyond coverage A, homeowners may consider other coverages as well. For example, they may contemplate equipment breakdown coverage if appliances were upgraded, including water heaters, security systems, refrigerators, central air conditioning systems and more. This coverage can potentially address costly repairs or replacements that may be needed if those systems and appliances were to fail.
2. Are you working out of your home, have started a home business or are renting your house?
There are 31 million small businesses in the U.S. and more than half are home-based, according to the U.S. Small Business Administration—and during the pandemic, more are setting up shop than ever before, leaving many of them open to financial risks not covered under standard homeowners policies.
Whether it's a business with foot traffic located within a primary residence, inventory stored at the home or a business that simply requires liability protection, there are several options to help protect these homeowners.
Similarly, homeowners who rent out their houses as short-term rental properties also can be protected by home-based business coverages. Some insurance companies offer home-based business coverages as endorsements to homeowners policies, making it more efficient, cohesive and cost-effective for both the customer and the agency. If home-based business coverage is added, customers may also want to consider an umbrella policy for additional protection.
Additionally, cyberattacks continue to grab the headlines. With that in mind, home-based business owners should consider cyber coverage that can help with system restoration, expert advice and data recovery costs for computers and connected devices in the event their home network is breached. Such coverage may also assist with online fraud that results in direct losses, such as phishing schemes or identity theft and unauthorized use of credit cards or accounts.
3. Have you considered how to protect your assets from extreme weather events?
Severe weather events are becoming increasingly common. In 2021, there were 20 weather disasters in the U.S. with losses that exceeded $1 billion, according to the National Centers for Environmental Information (NCEI). More and more, weather patterns are changing, resulting in natural disasters in geographic regions that typically haven't been susceptible to them.
Agents can educate customers on preparedness by talking with them about completing home inventories, ensuring items like sump pumps are proactively installed and preventatively maintained, and offering advice to help protect their properties. The Insurance Institute for Business & Home Safety (IBHS) is a great content resource.
Customers may benefit from water backup coverage for damage caused by backed up or failed drains—the third-most costly claim, behind fire and liability lawsuits. When siding or a roof is damaged, sometimes the original materials are no longer available. Rather than having mismatched materials, siding or roof restoration coverage can help keep a home's exterior uniform. For account customers, if a storm damages their vehicle and their home, waiver of deductible coverage could help save them from paying multiple deductibles for one event.
4. Would you like to combine all of your accounts with one insurance company?
Customers who have their personal lines policies with a variety of insurance carriers can potentially benefit when combining their policies with a single carrier. Doing so allows customers and their agents to efficiently address additional coverage needs, such as motorcycle or boat insurance, and may provide some multi-policy discounts too.
A common effective date and a single company to call for claims improves ease of use for the customer and the agency, while boosting retention. Data from The Hanover shows account business has a retention rate of up to 95%, significantly higher than split and monoline accounts. The data also shows that account business has about 3 times higher premiums and 5 times greater expected lifetime values than split or monoline accounts.
5. Can we add an email address and cell phone number to your account?
This is a simple one, but ensuring customer contact information is up to date can help make it easier for an agency to conduct periodic touchpoints with customers. Customers can then receive communications from their carriers to manage their accounts, sign up for paperless billing and more. This can help boost an agency's retention.
The Hanover's research shows clients who receive two or more communication touchpoints a year have a retention rate that is 10 points higher than those that do not.
The COVID-19 pandemic brought a lot of changes and challenges for many individuals and families. As you're connecting with your personal lines customers this year, these five questions can help prevent gaps in coverage and build account business for your agency. The consultation an independent agent can offer—a personalized assessment of customers' unique needs and risks—is an important value-add over direct carriers.
Taking some time to get up to date on any changes your customers have made can help set them, and your agency, up for success.
About the author
Paul James is national sales leader, personal lines, at The Hanover Insurance Group Inc.