SHARE
advisors
Abandoned building after fire
Feb 28, 2018

How can family offices protect against risk?

Insuring a family (or a group of multigenerational families) that has a need for significant asset protection is a task that is especially challenging. It is also a task which for 30 years has been the sole focus of our firm.

Along the way, our lengthy experience has helped us identify best practices for family offices working to represent clients’ interests and assist in identifying any insurance “red flags.” We know the right questions to ask to ensure best-in-class protection for individuals and families. Some of these queries include:

• Have the various family members and generations had a frank discussion recently on risk tolerance and current coverages? If an in-depth review has not been conducted within the last three years, then there is need for concern. Assets are acquired over time and risk appetites change. If you don’t conduct an analysis at least once a year, significant gaps in coverage may occur.

• Is the insurance placement facilitated through one insurance professional capable of handling and understanding the needs of single- and multifamily offices? (This will ensure a seamless protection program.)

• Has the family considered a group personal excess program for competitively priced high limits of coverage? (If a lawsuit puts assets at risk, the last thing anyone wants to worry about is running out of coverage. Certain carriers offer limits up to $100 million on a policy to address claims of property damage and personal injury—including lawsuits filed by private staff, auto accidents with uninsured drivers and much more.)

• Does the insurance program address the needs of different legal entities such as family trusts, estates and LLCs? Many families and individuals structure their property ownership using LLCs, LLPs and trusts. Not all providers enable policies to reflect these alternative structures, which can result in diminished protection or complications at claim time.

• If any of the family members live in a catastrophe-prone area (say, subject to hurricanes, wildfires or earthquakes), have extensive pre- and post-disaster plans been put into place?

• Are background checks being recommended for employees of the family, as well as a comprehensive employment-practices liability and/or workers’ compensation program? (It is not uncommon for nannies, housekeepers, private assistants, etc. to take their employers to court.)

• Are family members who are sitting on nonprofit boards being offered the coverage of directors and officers and excess directors and officers? Nonprofit organizations typically operate on tight budgets and carry a minimal amount of liability insurance. If a family member sits on a board of a nonprofit organization, he or she may add up to $1 million of protection on top of existing board coverage.

• If there has been a major lifestyle change (e.g., a new marriage, a divorce, an employee change or a significant change in the value of property or assets), has the insurance plan been reviewed to make sure it is aligned properly?

• Are all aviation, watercraft, motorcycles, etc., properly protected so that they carry matching limits of liability?

• Has the family office thoroughly investigated the need for kidnap and ransom coverage, including both domestic and international exposures?

• Has the family office itself reviewed its professional insurance program (professional liability, family trust and trustees liability, directors and officers, employment practices liability, etc.)?

If you believe your family office could benefit from any of these best practices regarding family office and/or sophisticated personal insurance risk management, please contact Joseph Gendelman, CEO and president.

RECENTS TWEETS

Disclaimer: Worth magazine is a financial publisher and does not recommend or endorse investment, legal, insurance or tax advisors. The listing of any firm in the 2018 Worth® Leading AdvisorsTM Program does not constitute a recommendation or endorsement by Worth magazine of any such firm and is not based upon Worth magazine’s experience with, or prior dealings with, any advisor. The information presented for each advisor, including but not limited to any related profile, statistical data, presentation, report, commentary, recommendation or strategy, has been provided by such advisor without review or independent verification by Worth magazine. Any such information is the sole responsibility of the advisor. Worth magazine makes no representation or warranty as to the accuracy or completeness of such information, assumes no liability for any inaccuracies or omissions therein and disclaims responsibility for the suitability of any particular investment recommendation or strategy for any person. Nothing contained in Worth magazine constitutes or should be construed as any form of investment, legal, insurance or tax advice or as a recommendation to buy, sell, hold or trade any securities, financial instruments or assets. Readers are advised to consult their legal, financial, insurance and tax advisors prior to making any investment or pursuing any investment strategy. Past, model or hypothetical performance is not indicative of future results.

back to top