Top Underinsurance Risks Agents Need to Talk About in 2021

Frank Pennachio has more than 30 years of experience in the insurance industry as an agency owner and producer. In 2009, he sold his agency and co-founded Oceanus Partners, a ReSource Pro company. He is now a full-time trainer and consultant to insurance organizations.

An opportunity for insurance agencies to build agility

As globalization and digitization bring new risks and complexity to the world, insurance agencies will need to build additional agility to better serve clients. How? By conducting more comprehensive risk assessments and leading clients away from the commodity approach to buying insurance.

In 2021, the underinsurance crisis represents an opportunity for agencies to not only create better outcomes for insureds but differentiate themselves from the competition and grow revenue through cross-selling and upselling.

Below is a list of common underinsurance risks buyers will face this year. To read more about how agents can better help clients address risk, and what often prevents them from doing so, download the full white paper.

Continue the conversation at the Property and Casualty Risk Advisor Training, March 23-26

Ordinance or law limits

If a 100-year-old building such as a city hall is destroyed in a fire and needs to be rebuilt in accordance with modern building codes, it is unlikely there is adequate ordinance or law coverage.

Business income and extra expense limits

The hot topic of today may be virus exclusions, but we also need to help insureds determine what kind of revenue stream they need when business income coverage is triggered. Most people who do not recover from a business income loss fail to do so because they do not have the proper revenue stream.

Off-premises power failure

Many business owners do not consider that even if their property is not physically damaged, they may suffer a loss of power that prevents them from doing business.

Flood

Many insureds do not think they are at risk of flood simply because they do not live in a high-risk area. Floods still occur and cause catastrophic losses, yet flood coverage is often treated like a checklist with brokers simply asking whether the insured wants it.

General liability and indemnification agreements

Insureds often assume that an Automatic Additional Insured Endorsement is enough to protect them in the event they are sued or elect to hold someone harmless, but this kind of blanket endorsement often falls short.

Auto liability

We frequently see problems with Symbol 7 for liability coverage when vehicles are missing from the schedule. In other cases, issues arise when an employer is unaware that a driver’s license has been suspended or revoked, which may disqualify them from coverage.

Workers’ compensation

With many industries now working from home, employers may fail to account for employees who are working in a state different from that of the company headquarters. Additionally, if an employee works on or near a navigable water, extra coverage is usually needed.

Employment practices liability

Due to the ongoing pandemic, we may need to conduct medical screenings when employees return to their workplaces. If we do, this could raise privacy concerns. If we do not, it could be considered negligent.

Fiduciary liability

Starting with 401(k)s, attorneys have discovered that fiduciary claims are very profitable. They have successfully sued many employers due to excessive  fees and investment options that are part of 401(k) plans and have begun targeting employer group health plans.

Employee benefits

Inadequate insurance may impact the general administration of benefit plans.

Cyber risks

Cyber risks are a growing concern now and post-COVID, but many insureds are still refusing to purchase coverage.

Employee theft and embezzlement

Theft by employees is often less expected than theft by outside parties.


Want to lead more conversations about these risks with your clients? Download our white paper or get in touch.