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Financial Planning > Behavioral Finance

Why I'm Using Client Questionnaires on P&C Coverage

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In a recent post I discussed how financial planners should consider looking into a client’s property and casualty insurance coverage. From the comments made on my recent post–most from practitioners who engage in this type of analysis, it seemed probable that most planners ignore this area when constructing financial plans. However, without properly analyzing these issues, gaps in coverage may result.

When I made that post, I was working to complete my continuing education requirement and this was one of the topics in the material. Years ago, when I was studying to earn my CFP, this was also discussed in the text but the material was so broad, and since I did not have a P&C background, I promptly forgot about it. However, without properly analyzing these issues, gaps in coverage may result.

Consider the wealthy professional or entrepreneur who is underinsured in the liability area. They cause physical or financial harm to one of their clients and with our litigious society, they are sued and it costs them dearly. If we were managing their financial assets, we may have witnessed a major outflow. Since we try and protect our client’s wealth from market downturns, why leave this critical area unattended? Here’s what I am doing about it.

In recent weeks I have been enhancing my financial planning software in this area. Moreover, I have developed three questionnaires: one for personal, one for professional, and one for commercial clients. The personal questionnaire delves into the client’s homeowner’s, automobile, and liability coverage. The professional version probes their exposure and coverage relating to malpractice and errors and omissions insurance. Finally, the commercial questionnaire is designed for the business owner and covers issues pertaining to employees who are injured on the job plus lawsuits which may arise from wrongful termination, sexual harassment, or discrimination.

The questionnaires are a first effort, but I expect they will expand as I grow more familiar with these areas. I should mention that I have no plans to add this as a product offering. To the contrary, I view my role as the person who watches out for clients on a number of fronts. After identifying any gaps in their coverage or potential risks, I would assist in bringing the solution. Clearly, their other advisors would need to be involved.

I’d like to hear from those of you who engage in this area as a part of comprehensive financial planning.


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