How can an agent assess the adequacy of a client's current coverage?

To assess the adequacy of a client's current coverage effectively, it is essential to review coverage limits, exclusions, and the client’s current risk exposure. This comprehensive evaluation allows the agent to understand whether the client has sufficient protection against potential risks they may face. Coverage limits indicate the maximum amount an insurer will pay for a covered loss, while understanding exclusions reveals what is not covered under the policy. Additionally, analyzing the client's current risk exposure—such as changes in property value, lifestyle, or liability—provides insight into whether the existing coverage meets the client's current needs.

This thorough approach is crucial, as it ensures the client is well-protected and not underinsured or overinsured based on their unique circumstances. Relying solely on previous incidents, focusing only on the client's age, or basing estimates on average market rates does not provide a complete picture of the necessary coverage. Each of these methods overlooks critical information that can help determine the adequacy of coverage.