Maximizing Asset Protection: Key Insurance Tips for High-Net-Worth Families

For those with significant assets, property and casualty coverage is not just a safety net; it's a critical component of any wealth preservation strategy. A single uninsured loss event can lead to significant financial setbacks or jeopardize a family’s financial stability. Having the right policies in place safeguards against losses that may result from various risks such as accidents, theft, natural disasters or lawsuits. Being proactive with appropriate insurance coverage and using sophisticated brokers and carriers who are equipped to handle high value and diverse asset coverage will ensure asset preservation in the long run.    

In collaboration with Marc Gillette, a seasoned insurance broker from Fred C. Church, we’ll delve into how specialized insurance can address unique challenges and protect significant assets.

Coverage Differences at the Premium Carrier Level

Let’s take a deeper dive into some of the coverage differences at the premium carrier level:

Homeowners Insurance

Premium (or high-end carrier) homeowners insurance policies offer a range of features, including:
•    Guaranteed and extended replacement cost
•    Agreed value and cash settlement options
•    Identity theft and personal cyber protection
•    Equipment breakdown and green home coverage

In addition, they provide:
•    Superior customer service
•    Risk management advice
•    Efficient claim handling

However, standard policies (with mid-market carriers) typically have more exclusions, limitations, and conditions compared to premium policies. They may not cover the full value of your home and its contents. While these policies tend to be less expensive than premium policies, they may fall short in protecting high-value homes and assets.

Flood Insurance

Flooding is the most common and the most expensive natural disaster risk. Dramatic weather patterns and land development have reduced the earth’s capacity to absorb water, causing nearly 99% of counties in the U.S. to experience flooding. With an increased risk of flood in every state, flood insurance is crucial for quick recovery without the burden of out-of-pocket repair and replacement costs. Working with an insurance partner who has access to both private flood insurance and the National Flood Insurance Program (NFIP) can provide you with a larger variety of coverage options.

Car Insurance

Owning high-end vehicles can require specific needs and pose unique risks. A tailored policy for luxury cars should include:
•    Specialized repair shops
•    Use of original parts
•    Luxury rental car provided during vehicle restoration after an accident or damage

Additional coverage not typically included in standard policies may include:
•    Agreed value
•    New car replacement
•    Gap coverage
•    Roadside assistance

Premium carriers will provide dedicated claims representatives and concierge services that handle claims quickly and efficiently, providing personalized attention and support. 

Excess Liability Coverage

Excess liability coverage, also known as personal umbrella coverage, protects beyond the limits of your primary insurance policies. It can protect assets and future income from being seized or garnished in case of a judgment that exceeds primary insurance limits. These policies can also cover defense costs, attorney fees, and other expenses related to a lawsuit.

Individuals with high incomes, significant assets, or high-profile lifestyles are at greater risk of facing lawsuits or claims that can threaten their financial security and reputation. Such lawsuits can stem from various situations, such as car accidents, injuries on your property, defamation, cyber liability, or personal injury. For this reason, adequate liability coverage is essential for those who want to safeguard wealth and legacy from potential legal risks. 

Addressing Unique Challenges for Wealthy Families

Wealthy families often encounter unique challenges that require more than just standard insurance solutions. Specialized brokers can address these challenges with tailored strategies that go beyond the basics.

Insurability

Insurance carriers are becoming more selective about the properties they cover, often leading to higher premiums or even refusal to insure homes in high-risk areas such as California, Colorado, and Montana. The age of a home, particularly the roof, can impact insurability, as older structures are more prone to damage. Additionally, homeowners with a history of multiple claims may find it difficult to obtain insurance, as they are perceived as higher risk. A sophisticated broker with a lot of horsepower will be able to customize a tailored plan to solve these challenges.

Increasing Costs

More frequent and severe weather events are increasing the number of claims and pushing premiums higher. The rise in cyber threats poses new risks for individuals with substantial digital assets. To manage these challenges, families can adopt proactive strategies such as: 
•    Opting for higher deductibles
•    Maintaining continuous coverage
•    Handling minor claims independently (i.e. self-insuring)
•    Using telematics for safer driving incentives
•    Installing protective devices in homes such as water shut-offs, and leak detectors
•    Connecting generators and low temperature monitors along with alarm systems

Partnering with an experienced broker can streamline these efforts and help families navigate complexities while maximizing available credits and incentives.

Conclusion

For families with significant wealth, comprehensive insurance coverage serves as a vital tool in protecting their assets and ensuring long-term financial security. An uninsured loss event can have serious financial repercussions, potentially jeopardizing a family's stability. Proper insurance coverage protects against various risks including accidents, theft, natural disasters, and lawsuits. Being proactive with tailored insurance solutions and partnering with experienced brokers who specialize in high-value and diverse asset coverage is essential for long-term asset preservation.

Lake Street Advisors understands the unique needs of wealthy families and provides valuable support in optimizing your insurance program. Our team works closely with your broker to review and enhance your coverage. If you are not currently working with a knowledgeable broker, Lake Street Advisors has established strong partnerships with trusted resources to connect you with the right expertise. 

To explore how we can assist in safeguarding your assets and securing your financial legacy, please reach out to us today. 

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