How can family offices protect their clients against risk?
Insuring a family (or a group of multi-generational 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, there is need for concern. Assets are acquired over time, and risk appetites change. By not conducting an analysis at least once a year, significant gaps in coverages may occur.)
- Is insurance placement facilitated through one insurance professional capable of handling and understanding the needs of single- and multifamily offices? (This would 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, LLCs, etc.? (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.)
Not all providers enable policies to reflect alternative structures such as LLCs, LLPs and trusts.
- If any of the family members live in a catastrophe-prone area (i.e., subject to hurricanes, wildfires and earthquakes), have extensive pre- and post-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 directors and officers and excess directors and officers coverage being recommended for family members sitting on not-for-profit boards? (Not-for-profit organizations typically operate on tight budgets and carry a minimal amount of liability insurance. If a family member sits on a board of a not-for-profit 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, at 800.845.4145, ext. 13, or email@example.com.