Sunday, August 17, 2014
Surveying the landscape for honest businesses yields a gem
As a small business owner trying to generate sales, is it ever a good idea to advise customers to not avail themselves of your services?
A few weeks ago, homeowners in parts of the Northeast where I live began to receive notices that revised flood plain classifications made it necessary for us to start carrying flood insurance on our homes. This wasn't exactly a surprise, since there had been talk of the revisions for some time. The unknown factor was how much coverage might cost.
The notices and subsequent discussions with insurance providers or banks holding mortgages began to make the costs clear.
My wife and I were among those who received a notice a couple of weeks ago from the bank with holds our mortgage, telling us the bank could sell us flood insurance. The banks quoted a price, but encouraged us to shop around among other providers for the best rate.
Our insurance broker informed us that to pinpoint an accurate price, she'd need a flood elevation certificate. While we knew we were in a flood plain and could consult FEMA maps to see what elevation zone we were in, no elevation certificate yet existed for our house. To get one, we'd have to hire a surveyor, which would cost between $600 and $1,000.
What we didn't know was whether the surveyor's findings would result in a lower premium than what our bank was offering. Because we and our neighbors were in the same boat -- most of them had no flood elevation certificates, either -- we couldn't compare prices on insurance.
The bank wasn't particularly helpful in letting us know how it determined the cost of our insurance without an elevation certificate. Uncertain what to do, we asked a surveyor, who'd done work for us before, whether it was worth spending the money on his services that could equal almost half of what the bank quoted as a price for flood insurance. He said it could just as easily turn out that once the elevation certificate was completed, other insurance company premiums might be lower -- but they might also be higher than the bank's quote.
If the surveyor had told us he thought the wise thing to do was go ahead and get the elevation certificate, we would have hired him for the job. Instead, he said, "I'd wait." He advised us that rather than spend money on his services, he'd recommend going with the bank's offer, then speaking with neighbors about their experiences. If it became clear later on that the elevation certificate was worth it to receive a lower rate, he'd be glad to handle our insurance.
He didn't turn down the job because he didn't want it. He works for a small company in town and could use the business. He advised us not to rush into hiring him because he believed this was honest advice and the right thing to do for a valued customer. When the time comes to get a flood elevation certificate or any other surveying services, his company has our business.
Jeffrey L. Seglin, author of The Right Thing: Conscience, Profit and Personal Responsibility in Today's Business and The Good, the Bad, and Your Business: Choosing Right When Ethical Dilemmas Pull You Apart, is a lecturer in public policy and director of the communications programat Harvard's Kennedy School.
Follow him on Twitter: @jseglin
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