A New Financial Perspective - With Failure Comes Wisdom

A New Financial Perspective -With Failure Comes Wisdom

By

Marsha Walker Eastwood, Bs, MSHSV

Failure is one of those things we hate to talk or think about. The very fact that we cannot master a task makes us feel awkward and out of control, for defeat whether large or small makes us question our ability to get it right. Sometimes it takes more than once to realize that perhaps the puzzle we try so passionately to solve may be just beyond our reach, and at some point, as Joel Osteen so eloquently stated, “You must decide that you are going to move on. It will not happen automatically. You will have to rise up and say, ‘I don’t care how hard this is, I don’t care how disappointed I am, I’m not going to let this get the best of me. I’m moving on with my life.”  But if we look closer at the failure, we will discover that it was filled with teaching moments that can serve us well as we move on. Here is a case in point…

These days it is hard to watch television without becoming acquainted and virtually entwined with the lives of Flo from Progressive, Jake from State Farm, Doug and his emu who represent Liberty Mutual, the Good Hands Man and Mayhem who are pitch people who represent Allstate, Martin the Gecko and rappers Cecil Glenn and Steve Gibson better known as Tag Team who do their thing for Geico. Their collective purpose is to sell auto insurance that will protect you, the insured from a variety of perils, however, what they are also doing is sending subliminal messages about an array of property and casualty insurance, and life, health, and accident insurance as well.

I recently had an opportunity to work for one of the companies and all I had to do was to pass THE test for a personal lines license which included being able to sell auto and homeowner’s insurance. The course and the exam were paid for, and the minute I began the training, I knew I had embarked on the path of failure. It was an online, self-study course. The more information that was presented to me the more confused I became and there was no help available to answer questions, which no doubt contributed to my failing the test not once but twice. For some the third time is the charm, but I discovered that the company presenting the course had a 49% pass rate. Unfortunately, I did not do due diligence and check out the company before signing up and paying to take it a third time. Failure had now taken up residence in my head and my heart. With a little introspection I realized that the real reason for my failure was that plain and simple, I was just not interested in the finer points of auto and homeowner insurance That lack of interest made it difficult to my brain to retain the information. After I adjusted my mindset what I quickly discovered was how little most people really know about their policies of protection, me included.

When I decided to buy a house, I became obsessed with the search. After I found just the right one at the right price and a bank that would give me a low interest mortgage, I was so happy I could hardly contain my joy. The banker asked me if I had car insurance, and I informed him that I did. The agent helped me with the details and the next thing I knew I had “bundled” with my car insurance carrier. I signed on the dotted lines, of which there were many and prepared to make the big move. A few days later two enormous envelopes arrived – one from the bank and one from the insurance company. The print was so small, and the number of pages and subpages seemed to go on endlessly. I read the declaration page and then put them both in my file cabinet drawer as I am sure many policyholders do. In retrospect I realize that was mistake number one, and perhaps the main reason I failed the test.

My trust in the agent and the insurance company to do the right thing if I ever needed them afforded me a false sense of security. I discovered this was not the case when I became involved in a dog bite case. It never even occurred to me that that type of event could be covered. The ensuing lawsuit forced me to become familiar with certain provisions of the policy and fortunately my law enforcement training and investigations training prevented the plaintiff from getting into those deep pockets of my insurer and potentially creating a negative claims history and a raise in my premiums.

If failing the test taught me anything it reinforced the adage that knowledge is power. The course and the tests were tantamount to reading every single line of my car and auto policies and then committing all that information to memory. But it did much more than that. It created a new understanding of the terminology used in my personal lines’ coverage from the simple to the complex. I learned what I was paying for and why, what I needed or did not and how not to be influenced by those soap opera styled commercials.

The purpose of personal lines insurance is risk transference which is defined as a risk management and control strategy that involves the contractual shifting of a pure risk from one party to another. One example is the purchase of an insurance policy, by which a specified risk of loss is passed from the policyholder to the insurer. As simplistic as the definition is, it is also extraordinarily complex for someone looking to buy a homeowner’s insurance policy. If you are like me and a lot of other consumers, what is the meaning of pure risk? I learned from my failure that Pure risks are risks that have no possibility of a positive outcome—something bad will happen or nothing at all will occur. The most common examples are key property damage risks, such as floods, fires, earthquakes, and hurricanes. In other words, mostly natural disasters. But within that context all those disasters are not covered, most notably earthquakes and floods. These events are called perils which are specific causes of damage to a person or policy.

Defined by insurance carriers, there are sixteen basic peril types that are commonly covered by a "named perils" insurance policy. However, this is not a universal list. Exactly what is or isn't covered in your policy can vary based on your insurance company, your location and the type of insurance policy you bought, so it's essential you read your own policy in detail to know what it covers. They are sometimes called "perils insured against," and you can usually find yours in the "Perils Insured Against" section of your homeowners or renter’s insurance policy. For example, in some coastal areas, wind damage may not be included by default and will require a separate endorsement. And if you have an open perils policy, that means you will not have any perils listed, only exceptions.

It was at this point that I realized like the self-study course was a disaster in the making and a perilous exercise that could have been approached by the who, what, where, when and how method. I was gaining knowledge by the day but in bits and pieces making it difficult to connect the dots. Once the pressure was off, I began to absorb the knowledge like a sponge. By failing, I was not only learning about personal lines, but I was also able to practically apply that knowledge in a way that I could understand the significance of each paragraph, section, subsection. In other words, failing the test made me understand exactly what I was paying for with my premiums. That presented me with the knowledge to “shop around” and pay for only what I needed.

There were some surprises along the way. I learned the importance of personal injury coverage under the liability clause in my policy that also includes protection against an accusation of slander. Given the popularity of social media, Investopedia cites this example, “Imagine you wrote a blog comment asserting that its author received a dishonorable discharge from the military. If the claim made in that post is false, then this certainly appears to be a case of defamation. However, if it is a true statement, there can be no claim of defamation.

Yet, even if the statement is false, the blog's owner may not care very much what people believe about their exit from the military. In such a case, their audience may also not care much, making the statement potentially not defamatory.”

Sometimes when all is said and done, failure can be the greatest teacher of all. Had I never gone down that path I would have never been remotely interested in reading my entire homeowner’s and auto policies, and with that understanding there may be some financial reward in making a more informed decision when it comes to protecting my assets.

© Marsha Walker Eastwood

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