RISK MANAGEMENT
What’s the True Cost of Your Insurance Coverage?
ACA International’s wholly owned insurance agency, Collectors
Insurance Agency Inc. (CIA), sometimes
hears from ACA members who have found
a lower premium elsewhere. Upon
examination, CIA representatives typically
find the coverage is substandard and
switching policies would expose the
member to undue risk. Following are a few
examples.
classified her as a financial planner
rather than a collection agency and
explained the ramifications, which
could include the coverage being null
and void in the event of a claim. Upon
calling this to the agent’s attention, she
was told it didn’t matter and she
“should be fine.” Uncomfortable with
that response, she wisely elected to
remain with CIA.
CIA client service representative
reviewed the member’s loss history and
shared with the member that in the
past three years he had three loses, all
with payouts well over the deductible.
If the same claims occurred with the
other carrier’s policy, his premium
savings would not make up for his out-of-pocket deductibles. The member
remained with CIA.
• An ACA member in South Carolina
contacted CIA and another insurance
agency for Errors & Omissions (E&O)
quotes. The other agency provided a
quote several hundred dollars lower
than CIA’s. Before purchasing the policy,
which he was told was “apples to
apples” with CIA’s policy, he sent a
copy to CIA for review. CIA suggested
the member question an exclusion of
claims brought by the Federal Trade
Commission or any attorney general.
Several days later, the member did not
receive a response from the agency and
purchased ACA’s policy, ensuring proper
coverage. This is a perfect example of
the importance of considering cost
versus price.
• An ACA member insured through CIA
contacted her client services
representative, saying she had found
cheaper business owners insurance
that would save her 20 percent. She
agreed to have him review the new
policy. He found that the agent had
• CIA spoke with an insured ACA
member who received an E&O quote
from another agency for approximately
• An insured ACA member said he
planned to switch to a different
carrier’s policy with an increased
deductible of $15,000, resulting in a
savings of 50 percent. The member’s
• In April 2008, an ACA member asset
buyer left CIA’s E&O program because
another agency offered a policy with a
premium savings of $5,000. Four
months later, the member asked to
return to CIA. The other agency hadn’t
included all of the member’s entities as
insureds. The insurance agency failed
to recognize that many asset buyers
form parent or holding companies and
then establish and own collection
agencies. When a class action named
an uninsured entity as the defendant,
the ACA member learned the company
had no coverage for this six-figure
claim. This is an example of the vital
need for collection industry expertise.
