By Hutch Ashoo & Christopher Snyder
At A Glance
• High-end insurance policies are not usually purchased from your local insurance agent down the street.
• Have you recently evaluated if the quality and extent of your coverage conforms to your current needs?
• Have you evaluated the costs of your current coverage vs. what others are charging now? Most insurance professionals would perform this for you for free. Be sure you are comparing apples to apples, coverage and quality wise, cheaper is not always better.
Families with vast wealth require high-end asset insurance to cover unique custom-made or acquired materials like Italian marble or church logs imported from Europe, as well as valuable personal arts and jewelry. The authors of this article do not provide such insurance coverages, but as wealth managers we coordinate and help clients evaluate the available options.
While many mass-market policies top out at $1 million, the wealthy may need a customized policy with a $100 million limit to account for liability and replacement of one-of-akind items. You will need such policies for your main home and your other houses, be they in or out of the country.
You can begin by having an inventory specialist thoroughly document your house’s contents top to bottom. Your dresses and Armani suits, crystal, electronics, art, Persian rugs, antique furniture, etc. should all be photographed and documented to help not only determine the coverage needed but to also streamline any future claims. Your custom insurance policy should also allow for generous living expenses in case you have a loss where your home may have to be rebuilt or repaired. The amount should be sufficient to allow you to live in a comparable living space to your home.
These types of high-end insurance policies are not usually purchased from your local insurance agent down the street. We would only recommend dealing with an insurance professional whose sole business is these custom policies. We even know one company that can offer some Bay Area homeowners earthquake insurance as part of the package, for a very reasonable rate. Some companies will go as far as not requiring you to accept the ridiculous deductible earthquake insurance usually comes with.
Liability is a critical coverage you shouldn’t skimp on. Typical auto and property policies will cover up to $300,000. If you are worth $220 million and you are sued, this would provide little comfort or protection.
So what amount should you consider when buying liability coverage and what risks do you have? The first thing to consider is your net worth; the rest can be determined by reviewing and addressing the following list of risks.
- Do you travel internationally or have a child who studies abroad?
- Do you have minor children who drive and may get into accidents?
- Do you entertain a lot at home or at your business where someone may slip and fall and get hurt?
- Do you have domestic help where you may be subject to identity theft, wrongful termination, workers compensation or sexual harassment suits?
- Are you in the media or the public’s eye through your business and philanthropy where the odds of identity theft or nuisance lawsuits are increased?
- Do you sit on a for-profit or not-forprofit board where you may need liability coverage?
- If you own real estate under a family limited partnership, trust, LLC, or other protective structures, does your insurance policy cover such arrangements?
Other types of coverages and risks you should consider protection for are automobile, watercraft, recreational vehicles, workers compensation, directors or officers insurance, professional liability, employment practices liability, fiduciary and trustee liability, aviation, equestrian, farms, ranches, sports and racing teams.
The protection you purchase should be re-evaluated on an ongoing basis to ensure your coverage is in line with your current risk exposures.
Here are some questions to ask:
- Have I recently evaluated if the quality and extent of my coverage conforms to my current needs?
- Have I evaluated the costs of my current coverage vs. what others are charging now?
- Have my most valuable possessions been appraised for recent replacement values and are my coverage limits in line with these values?
Finally, although a necessary evil, insurance should not be skimped on and must be carefully employed to allow you peace of mind.
Authors Haitham “Hutch” Ashoo and Christopher Snyder are partners at Pillar Financial Services Inc. in Walnut Creek. Ashoo is founder, president and CEO. Reach them at PFS@PillarOnline.com or 925-356-6780.