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We all have to purchase insurance and none of us like paying for it!
But we all know we need it…
As most pawnbrokers have experienced, it is not easy to find an
insurance agent with a lot of knowledge in providing the proper
coverage for your type of business. This is due to most companies
not offering coverage or understanding your business operations.
Your business has unique exposures, which are not traditional to
insurance. For example, you typically have pawned items belonging to
others, which you have made a collateral loan on for a lessor amount
than the true value. Therefore, it is important to know what your
state statues are regarding a partial or total loss. Are you
responsible for the loan amount or the actual cash value of the
pawned item?
In the event of a loss, the pawnbroker also has an insurable
interest in the unpaid interest of the loan. How will your policy
respond? What happens when you move pawned items to your owned
inventory? What value do you insure for, the loan amount or the
items fair market value? Can your agent answer these questions?
Other important questions may include:
Is my coverage written with an insurance carrier that falls under
the jurisdiction of the State Insurance Department (admitted) or is
it written through an excess or surplus lines (non-admitted) market?
What is the financial rating of the insurance carrier? Should I be
concerned if the company I am insured through is a non-admitted
carrier? How could this effect me in the event of a loss? It is
necessary to discuss these types of issues with your insurance agent
to better understand your insurance coverage.
Discuss the type of coverage you are being provided with your agent.
For example, even though your policy &/or quotation reads, "All
Risk", it is important to review the "Limit of Liability" section in
your policy as well as the exclusions. Most standard policies
severly restrict coverage for guns and jewelry.
Question your agent on the application. Is it a warranty
application? Does my policy have a co-insurance penalty if I am not
insured to value? We caution you, to always be careful when
completing an insurance application. Your insurance carrier accepts
the application verbatim until there is a loss, then, will they
question it completely.
We are not trying to paint the insurance companies as the "bad
guys". Their underwriters are just trying to do their jobs based on
a correctly completed application. For example, if you state on the
application, you are keeping 90% of your jewelry in a TL-30 rated
safe at close of business, and upon a loss it is determined only 50%
was in the safe. Coverage could be either denied or a large penalty
will be accessed. Naturally, if your application was submitted
properly, you should have no problem in the event of a loss.
Finally, always take time to complete your application and ask lots
of questions until you fully understand the terms and conditions of
your insurance policy. As a consumer, insurance policies can be
complicated. Review your policy now! DON’T
FIND OUT YOUR INSURANCE POLICY HAS GAPS IN COVERAGE WHEN YOU HAVE
CLAIM AND IT’S TOO LATE!!
Questions? Call or Email us!
ASK FOR Seth, Laura or Dave
Toll-free (800) 545-5624
Union Life & Casualty Insurance Agency
5225 N. Central Avenue, Suite #110
Phoenix AZ 85012
Phone (602) 277-5555
Fax (602) 265-9763
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