Insurance is an important, and even necessary part of life these days. Most people are already familiar with many of the common products like auto, renters, home, and even life insurance, and some may even come to you asking for various policies. However, most clients may not have even heard about umbrella insurance policies. As an insurance agent, you know that such a policy can be important to certain clients, but it’s not always appropriate to sell this type of policy to every client. So, let’s take a look at who really needs it and how you can best market it to your clients.
How Can You Best Explain Umbrella Insurance Policies?
Almost any adult will know what insurance is, especially common ones like auto and home. However, few people are familiar with umbrella policies, so how can you best explain what it is? You can use an analogy of, well, an umbrella! An umbrella covers your entire body and protects it from rain, unlike rain jackets that may only cover your body, a hat that shields your head, or boots that protect your feet. An umbrella insurance policy, however only supplements your auto, home, or renters insurance. So, for example, your home, garage or a covered walkway will cover you in case it rains, but happens when you go someplace without a roof? Then you need am umbrella to make sure you don’t get wet while you walk to the car or another location.
Another way to explain it would be through a scenario. Say that your client is driving his or her car, and he gets into an accident. But, he doesn’t just hit any ordinary car, but one that has a CEO or professional sports player riding inside. Now, auto insurance may cover the first $250,000 (for example) of damages and medical bills, but what if the victims sue your client for lost wages, which in cases like this could be in the millions? These people earn a lot, and they will sue your client and take all his or her assets, from savings accounts to some retirement accounts, even homes and cars. In some states, your client could also have their wages garnished for up to 10-years, in the event there aren’t enough assets and cash to pay the damages imposed by court order. Umbrella insurance can protect your clients by supplementing their basic policies. It should pay for most damages and liabilities over the other policies’ limits.
Who Needs Umbrella Insurance Policies?
When you ask any agent or insurance company “Who needs insurance,” the answer you get is “everyone.” While this may be true for certain types of insurance (especially ones mandated by state or federal law), umbrella policies are not always for everyone. Sure, you can try to sell it to everyone, but why would you spend time and resources marketing to people who don’t need it? You always want to use your time wisely, and by choosing the right type of audience, you will be more successful in selling more of these policies.
Let’s take a look at types of people who might need umbrella policies:
- Nearing Retirement – People who are nearing retirement should have this type of policy because they will have a lot more to lose. They won’t have the benefit of time to make up for losing their assets or retirment accounts, and they may end up having to rely on Social Security or forgo retirement altogether.
- High-Income or Net-Worth Individuals – As the saying goes, “More money, more problems.” According to a recent article in Forbes, about 80% of high-networth individuals worry about being sued. When a lawyer decides on how much they want to sue a person on behalf of their client, they of course want to get the maximum amount, so they will definitely look at a defendant’s assets and income and base it on that.
- Primary Breadwinners – Anyone who is the primary breadwinner of a family should definitely invest in life insurance, but those who have young dependents should definitely think about getting more insurance. After all, life insurance only kicks in if the policy holder dies, but they could survive and be sued by other people.
- High-Risk Occupations – Those in high-risk occupations, like firefighters, police officers, truck drivers, etc., and are the primary breadwinners should definitely get an umbrella policy. Also, if your client travels a lot for business, like sales people or pilots, then they should consider this supplementary product.
- Parents of Young Children and Teenagers – Kids are a blessing, but remember: parents are responsible for everything their child does before the age of 18. Teens, especially, aren’t the best decision-makers (blame it on the hormones and underdeveloped brains) and they may cause harm, property damage or injury to others unintentionally, but their parents would still be on the hook.
- Owners of Pools, Balconies, and other High-Risk Home Features – While features like these can often add value to a home, they are also risky as they can harm or even kill people. Pools are even considered “attractive nuisances” by some, and even if someone snuck into a home and used it without permission, the owners can still be sued.
There may be other types of people or occupations that could benefit from an umbrella policy – think creatively and you may be able to brainstorm a few ideas and approach people who are already in your address book to tell them about this type of insurance.
Why Should Your Clients Get an Umbrella Insurance Policy?
Most people think they are safe because they are great drivers, they have enough insurance, or this is the type of thing that “happens to other people.” However, it’s not just rich people who are in danger of getting sued. For one thing, your clients can’t predict who they will injure and it can be anyone. Next, they can’t predict everything that will happen to them. They might be coming home from a Christmas party and had one drink too many, then get into an auto accident. If they take a breathalyzer, they can become liable for all damages and medical bills. Or they might be abroad on vacation and they rent a jet ski for the first time, then run into a boat full of people. If your clients want to be safe rather than sorry, then they should consider an umbrella insurance policy.
An umbrella insurance policy can help protect a client’s assets that are well above what normal policies can cover. If you have clients who still have trouble sleeping at night despite having all the basic policies, then you should consider marketing this type of insurance to them. Of course, your clients may not even know that they are at risk. In that case, it’s your responsibility to let them know just what they may be facing. Umbrella policies can help save lives and prevent financial ruin, and helping people is really what being an insurance agent is all about.
