The Evolution of Insurance Products

A current example of how claims drive the insurance process is ride-sharing services like Uber and Lyft and the exposures they entail. In Massachusetts, the Personal Auto Policy excludes coverage for sharing, leasing, or renting your car for a fee or other compensation. Recently, MA passed legislation; however, there are many unanswered questions as the coverage situation has not changed. Because there is so little claim history and associated case law, not many insurance companies, locally or across the country, have thrown their hat in the ring to assure the vehicle’s operator and the guest occupant are covered if an accident occurs. Currently, in MA, an Uber or Lyft driver needs a livery policy to cover his/her vehicle and liability when transporting passengers. Perhaps this will change as claims history develops and insurance companies get a handle on the actual exposures and can forecast them.

When buying insurance protection for your business (or personal) needs, the discussions often primarily focus on what is covered and the insurance coverage dollar limits. However, it’s just as crucial for you as a consumer of insurance to ask your agent what loss situations are not covered or capped/ limited in any way. Because knowing what’s not covered can be just as important as knowing what is covered. Not having a clear understanding of what is excluded under your policy can potentially lead to claims that threaten the viability of your business.

While the risks associated with personal home and auto policies tend to be more similar, the risks associated with businesses can vary depending on your industry. For this reason, it’s almost equally important to ask your agent if the company providing your insurance coverage has a long history of writing policies for the risk associated with your industry. Companies with greater experience often write policies with language that provides better coverage and fewer exclusions because their expertise has helped them better understand the associated risks.

The reason you buy insurance is to be covered for a claim. So, don’t just ask your insurance agent what your insurance policy covers; clearly discuss what’s not covered. Policies can differ among insurance companies, and you may find that there are options for broader protection through a different company. The premium might be higher; however, if you’re getting better coverage that can prevent a situation where you’re not covered, It can be well worth paying a bit extra.

The key is to be clear on where your exposures are and what protection you’ve purchased because no one wants to be surprised when a claim occurs. Cost is always a consideration, but the most expensive policy doesn’t provide the coverage you need. When managing risk with insurance protection, you may retain some risk by having higher deductibles or forgoing coverage for specific situations. At Murphy Insurance, we continually strive to present you with options and communicate about your exposures so that you can make educated decisions about your protection plan.