SHARE
advisors
© MariuszBlach
Dec 8, 2016

What are the special insurance needs of individuals worth $10 million or more?

Consider these scenarios:

  • A CEO and his wife own 12 homes, 23 vehicles and impressive collections of art, jewelry and wine. Their insurance is managed by five different brokers and nine different providers.
  • A car collector wants to ship a 1938 Alfa Romeo from his Palm Beach estate to a historic rally in Italy.
  • Not long after a magazine profiles a family’s fortune, the family nanny sues and alleges sexual harassment.

With substantial wealth comes challenges that most of the population never sees. While lifestyles and circumstances can differ vastly, we typically see the same three deficiencies when a family of ultra high net worth upgrades to a specialized insurance program:

The Insurance Portfolio is a Mess

Typically, individuals amass luxury homes and other insurable assets—cars, fine art, yachts, jets and more—over a period of many years. As new homes are purchased, different local brokers are consulted. Eventually, accounts are overseen by multiple agents and providers, none of whom ever sees the complete picture.

Consolidation with one agent and one provider that caters to affluent clientele is a must. Review of a complete portfolio makes it possible to identify gaps or overlaps in coverage, and policies can be timed to renew on one common date. However, the most notable benefit is simplicity following a claim. We have seen cases in which a home was insured by one company, the wind coverage was placed with another and the collections inside the house were insured by a third provider. Settlement with that many players can be extremely challenging; months can be lost while the insurers determine who is responsible for what.

Family Members Are Vastly Underinsured

The two most commonly neglected areas of insurance are homeowners and excess liability.

Determining an accurate insurable value on a unique residence goes far beyond the cost of bricks and mortar. Every detail of the home’s interior must be considered, from hand-painted wallpaper to cast plaster ceilings. I have visited homes that were underinsured by tens of millions of dollars.

Excess liability—umbrella—insurance is much more straightforward; your coverage should measure up to your net worth. Jury verdicts tied to personal liability lawsuits continue to increase across the nation, yet only a handful of insurers sell excess policies with limits of more than $5 million. The only way to access more fitting solutions is through a reputable independent insurance agent.

The two most commonly neglected areas of insurance are homeowners and excess liability.

There Are Untapped Opportunities to Prevent Loss

Those with substantial personal assets have vulnerabilities related to home security, family safety and natural disasters. Addressing risks proactively can significantly reduce the likelihood of claims and also lead to premium savings. Smart home technology makes it easier than ever to manage multiple residences, and insurers are also using technology to bolster their clients’ defenses. For example, infrared cameras can detect temperature variations behind walls and ceilings, and ultimately preempt property damage.

Unfortunately, the majority of wealthy consumers in the United States still buy insurance from companies whose products were not designed to address their unique risks. It is critical to work with specialists who understand the complexities that come with significant wealth.

An Unorthodox Approach

American International Group, Inc. (AIG) is a leading global insurance organization. Through its Private Client Group, a division of the AIG member companies, successful individuals can access innovative protection for homes, excess liability, automobiles, private collections, yachts and more. AIG Private Client Group also offers supplemental services designed to minimize property damages, safeguard fine art and other collectibles, and bolster family safety.

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