Earlier this month multimillionaire celebrity Bruce Jenner was involved in a Malibu car accident that resulted in a number of injuries and one fatality. Then last week it was reported that he only has $250,000 in automobile liability coverage.
If true, it’s a financial disaster for Jenner. The crash victims and their relatives are sure to sue. The insurance company is likely to write a check for the limit and walk away. Jenner will be personally responsible for arranging his legal defense, paying for it, then paying any settlement costs above $250,000.
Based on what I see daily, his predicament is not that uncommon. It appears that Jenner and his advisors did not take risk management seriously. It also appears that whoever sold Jenner his insurance did not know who he was or what it meant.
Which brings me to today’s topic: getting to know you. Our slogan at Desert Insurance Solutions is “local experts, trusted friends”. The word friend means more than we could have fun over lunch. It means I try to get to know you so I can advise you better. Here are some “friendly” questions I would ask a prospective client and why:
How are you doing financially?
The answer will help me suggest appropriate liability limits. Generally limits need to cover net worth. Some very high net worth individuals carry less, but still enough to cover most lawsuits. Some low net worth, high income individuals (like a young doctor) would carry more to protect their future income stream.
Where are your homes?
Obviously I need to know this to insure them. But we have many secondary home owners here in the Valley. If the primary is outside the US I might use a specialty carrier. And if you want to stay with your home state agent on your primary home, I still want to ensure limits are consistent. Plus if your home state carrier is one that I use we might be able to extend your umbrella and get you additional discounts.
Working or retired?
If you’re working, you may have business or professional exposure that overlaps with your homeowner’s liability coverage. Plus I’ll get information about your commute.
Have any hobbies involving toys with engines?
Many people forget to insure off-road vehicles. Maybe they aren’t worried about physical damage, but there is still significant liability risk. “Toys” refers to motorcycles, boats, ATVs, RVs, tractors, dune buggies, golf carts, snowmobiles, collector cars, etc.
Speaking of toys, if you enjoy getting sued, get a dangerous dog. Or get a trampoline, diving board, tree house, swing set and water slide. Then put those things in a rental house. Or let the kids bring their friends up to your cabin and ride ATVs when you’re not there. Statistically speaking, you’ll be sued in no time!
If you have teenage kids you already know what that means for auto insurance. But some parents leave the kids on their auto policy after they have left home. This puts the parent’s assets and insurance history at risk for the adult child driving history and that of anybody the child lends the car to. It’s a much better idea to let the adult kids get their own policies, even if you pay for it. Then your assets will be protected and the kids get to establish their own good driving history.
Bottom line: becoming friends and getting to know each other is fun, but more importantly me getting to know you helps me advise you about risk and insurance. Think about that next time you see an ad that says “give us 10 minutes and we’ll save you $50”.
Maybe someone should have given Bruce Jenner more than 10 minutes.