by Mary T. Pipino, CPCU
President & CEO, Donald P. Pipino Company LTD
Do you think of buying insurance much like you think of buying any commodity? If so, you are probably buying on price assuming the quality and coverage are the same. Unfortunately, you may find out you do not have the coverage you thought you had after a loss occurs. Insurance brokers sell insurance, risk management firms evaluate the situation and structure the coverage specifically to the insured.
Let’s compare this to the medical profession. Think of the insurance broker as a general practitioner or express care facility and the risk management firm as the specialist. The generalist will provide good general care, but the specialist such as the pediatrician or internist specializes in their respective areas of medicine much like risk management firms specialize in specific industries such as retail real estate. The pediatrician and internist know the individual health of each patient and structure their medical care specifically to them. The risk management firm knows the individual culture and operation of each of their clients and structures the most economically feasible insurance purchases specifically to them.
Why is this so important? Insurance buyers often think all property polices, all general liability policies, all auto policies provide the same coverage. The buyer focuses solely on the price. Price is very important but a key component in a price comparison is the inclusion of a coverage comparison noting the differences in deductibles, coverages, and exclusions. People often read what is covered, but even more importantly, they need to know what is excluded.
Insurance policies are not generic products. Different insurers utilize different forms with different coverages, deductibles, and most importantly exclusions. It is critical to know what you are buying before a loss occurs because finding out the coverage isn’t there after the loss is way too late. Utilize a sophisticated insurance risk management professional that specializes in your industry that knows all the various forms so they can negotiate the most complete economically feasible insurances for your particular needs.
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