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 top wealth managers we coordinate and help clients evaluate the available options.
High-end asset insurance is a critical thing for wealthy families to consider. This type of insurance will protect many types of property. This includes electronics, gold, business property, jewelry, silverware, firearms, furs and boats.
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.
This can be an overwhelming process, but it doesn’t have to be. 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. That way, your life won’t change too dramatically if something outside of your control renders your home unlivable. Your custom insurance policy should protect you from being thrust into a new style of living.
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.
You should also consider employment practices liability if you have in-home employees such as drivers, nannies, nurses, and yard workers. Unfortunately, if you employ in-home workers, you could be slapped with accusations of all sorts, from sexual harassment to wrongful termination or even discrimination. Luckily, you’ll be protected from all of these accusations with employment practices liability.
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.
If you and your family are high-net-worth individuals, it’s essential for you to find an insurance policy that fits your lifestyle and protects your home and assets from potential harm and loss. Think of it this way: the more luxury items and assets you have, the more protection you’ll need, and rightfully so.
In your case, a typical homeowner’s insurance company probably isn’t going to be a great fit. That’s why more “high end” insurance companies are a better option. They’re more equipped to handle personalized and custom insurance policies and are typically more well versed in high-asset insurance than your average financial consultant.
Make sure you employ a financial advisor who’s well equipped to handle insurance and liability requests. Even if you employ a top wealth manager who specializes in high-asset protection policies, you’ll still need a financial expert to help with all other financial and retirement planning. Find a financial advisor in the Bay Area today.
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 pwm@Pillarwm.com or 925-356-6780.