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Form familiarity: insurance pros who know their coverage forms inside and out are more likely to impress, rather than confuse, potential clients.

AS Sir Francis Bacon said, "knowledge is power." One of the best lessons I learned as a novice in the insurance business was the value of knowing and understanding all of the coverage forms. For the first few weeks of my training, my mentor and I would follow a common routine.

I would ask her about a coverage issue, and she would respond: "What does the form say?" It was not a lack of knowledge on her part that was directing me to the coverage forms, but rather a smart and calculated approach to emphasize the importance of knowing the documents inside and out.

Whether you are new to the industry or a seasoned pro, it's a good idea to always stay abreast of the coverage and causes-of-loss forms. Really knowing the coverages we provide is essential to becoming an insurance expert. Here are some thoughts on why you should obtain and maintain a thorough knowledge of your insurance coverage forms:

The form is your product. The coverage forms are the contracts that we negotiate, buy and sell. The first rule of sales is to know your product, and to the underwriter, the coverage contract is your product. Even "Sales 101" instructs you to know your product.

If you went to buy a car and the salesman was not knowledgeable about the features, you might be turned off. Then again, you might wind up buying from him anyway because you might feel like you could negotiate from a position of power. It's the same with our business; when we do not know our product, we make ourselves look inadequate. You might make the sale, but it wouldn't be for the right reasons.

The devil is in the details. Tire magnate Henry Firestone liked to say that "success is the sum of the details." So while coverage forms are generally similar, they are not identical. Carriers spend significant time and effort to make enhancements to their policy forms, and if you don't know how one form differs or is better than another, you have lost an edge in negotiations. Even if it is a small edge, why give it up?

You never know what details might interest a client, so knowing the finer points of your forms is a good arrow to have in your quiver. On the flip side, if one of your forms is inferior to someone else's, you can have your answers already prepared and deflect the issue or minimize the significance of the coverage.

Make friends in the claims department. If you don't know the answer to a question, ask someone who can help you. The philosopher Nietzsche once said that there are no such things as facts, just interpretations. He probably never worked in insurance.

Claims people are the masters of interpretations and excellent resources for coverage questions. Claims people also can often provide a historical perspective and interpretation of coverage issues. A past legal decision can influence the culpability of a carrier, and the reasoning may not always be obvious or clear.

Ties go to the runner. Insurance coverage forms are "contracts of adhesion." If there are items that are unclear to you, then they definitely will be unclear to the insured. As such, you will probably wind up paying for a claim if it becomes a legal matter.

If you have trouble interpreting a coverage form, it is best to clarify it before a loss happens. In addition to your friends in claims, advise your product development people of the issue because if you have to go to court and you go with a vague coverage form, you will lose.

It is part of being a professional. For an industry that constantly struggles with image problems, being as knowledgeable and professional as possible is a good objective. You would probably be a little nervous if you asked a doctor a basic question and he opened up his medical book.

Obviously there are nuances to the coverage forms, and you can't be expected to have each verse memorized. But you should be able to answer most of the questions that are thrown your way and speak intelligently about the reasoning behind the coverage wording.

So keep a copy of your coverage forms handy. When was the last time you really looked at your forms? The importance of knowing and understanding the coverages we provide is a critical skill for the topflight insurance professional.

Michael P. Egan, a Best's Review columnist, is director of property programs at NSM Insurance Group in Conshohocken, Pa. He can be reached at
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Article Details
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Title Annotation:Property/Casualty
Author:Egan, Michael P.
Publication:Best's Review
Article Type:Column
Geographic Code:1USA
Date:Nov 1, 2006
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