All insurance policies look pretty much the same - contracts of lawyer-written insuranceeze that doesn't make any sense to the average person. Years ago it wasn't that big a deal. Most states regulated insurance forms and rates. Most policies were similar, if not exactly the same. Times have changed and policies and rates, for the most part, are unregulated. The good news for dealers is that open competition has driven insurance rates down. For the most part, deregulation has been good for dealer policy forms, too. It has given insurers the opportunity to respond to dealer needs with specialized coverages. However, the bad news is that most policies are unique and each has its own nuances, making it difficult to select the best coverage. Frequently, the individual dealer usually does not learn about these nuances until there is an uninsured or underinsured claim. It is your responsibility to know your coverage.
It doesn't help that some agents are not clear on the details of their own policies. Often, they are less clear when it comes to their competitor's policies. If a dealer relies on these interpretations, they may make a poor decision.
There are a few areas where most analysis errors are made and I want to bring those to your attention. First, is the Umbrella policy and how it relates to the policies below it. Some carriers choose to write relatively low limits in their underlying coverage while giving high limits for the same coverage in the umbrella. This is fine and an acceptable way to format policies. Common mistakes in this area are related to errors/omissions coverage and employment related practices. Some carriers do provide lower limits in the garage policy but also provide coverage in the umbrella. These comparisons may show the lower limits of the garage policy but ignore the umbrella. This may make the total coverage appear artificially low. It is very important to know which coverage parts extend to the umbrella and which do not. Every carrier is different.
There are a number of other coverage areas where close attention is imperative. We often see errors in the interpretation of physical damage deductibles, especially when it comes to wind/hail deductibles and aggregates. Another is whether or not prior damage disclosure coverage covers damages or only the value of the car. Many carriers now offer very broad and extensive property coverage. Often these coverage extensions are left out by the competitor in their analysis. There is also the question of which coverage parts are "claims made." This may cause complications when you want to switch policies now or in later years. We also see confusion about what "defense cost coverage" does and does not do.
Another area requiring close attention is claims. This is particularly important with loss-sensitive rating programs. Losses are sometimes underestimated which can make these programs look much better than they are. Loss-sensitive programs can be very cost effective, but you must be sure your actual losses are used in the estimated premium calculation. If not, ask for the estimate to be recalculated with your actual losses.
The most important thing is that you understand that all policies are not the same, and this is a good thing. Dealers are fortunaterates are down and they can select from a broad range of coverages, the ultimate goal being to select the best coverage for your business.