Thursday, September 11, 2008

Over-the-Top Insurance

It's fairly "common knowledge" that Betty Grable's legs were insured for $1 million. Of course, one can't really insure body parts: what one is insuring is the loss of their commercial or other value (cf: Jimmy Durante's $50,000 schnoz). The principle is called "indemnification," and it's the same one that we use to cover our cars and homes, and even our incomes.
Indemnification is simply that a particular item has independently measurable value, which then forms the basis for the risk. In Ms Grable's case, for example, her legs were an asset (no different than one's laptop or tow truck) which was essential to her success as a screen actress. If something bad happened to them, her career would have suffered, and that loss of value could be determined and the risk transferred to a 3rd party (e.g. XYZ Mutual).
Reason I bring this up is a fascinating article at MSN:
The piece goes on to list various celebrity's insurance tales, including a wine taster's taste buds and Mark McGwire's ankle. It goes to great lengths to distinguish these "special risks" as somehow completely different than, say, the rider on your spouse's wedding ring. In a sense, these risks are different: you can't just drop in your local agent's office and pick up a plan to cover your billion dollar yacht or your tennis prodigy daughter's left wrist.
But: most independent agents have access to these kinds of markets, if they're willing to look. I'll share two such personal stories; perhaps Bob and Bill will add a few of theirs, as well (and we'd welcome any readers' contributions in the comments section).
Many years ago, I was licensed for P&C (Property and Casualty). I've long since let that go by the wayside, but at the time I wrote a handful of auto and home policies every month or so. One day, I had a call from a gentleman who had recently purchased a putt-putt golf business which included a batting cage. When he approached his agent, he was told that there was no way to cover the liability on the cage, and so he started calling around. I was too young (and inexperienced) to say "no way," so I started looking, and eventually placed the risk. That was my first policy underwritten through Lloyd's. Very heady stuff, but also a great learning opportunity.
What did I learn?
Simply this: if money is no object, you can insure any thing or any one. Sometimes, that's pretty useful.
My other "special case" involved a young physician. She was referred to me by another physician-client, who hoped I might be of help. Dr Jones was a relatively young lady, who had a number of major physical problems, none of which actually prevented her from practicing her specialty. Still, no "regular" carrier would touch her, and she was quite frustrated and discouraged. I found a "specialty risk" company that offered her decent coverage, at a reasonable price. Again, it's not that I'm Super Agent, it's just that I'm too stubborn to give up.
The moral of the story is that one needn't be a celebrity or multi-zillionaire to have a "special risk," and that it's really not magic to cover it.
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