By Robyn A. Friedman
Planning to pick up a new boat at the Miami Yacht & Brokerage Show next month? Perhaps you just purchased a painting or sculpture at Art Basel? Then it’s time for a conversation with your insurance agent.
“High-net-worth clients tend to have exposures that may not be as typical as an average client,” says Annmarie Camp, a senior vice president for ACE Group, a casualty insurance company that provides coverage for affluent customers through its Private Risk Services division.
“They need to think about their personal insurance as part of their overall wealth-and-asset protection program and coordinate their insurance with their financial adviser or attorney so that everything their adviser network has created to protect and grow their assets is well coordinated.”
According to ACE, high-net-worth (HNW) families often do not carry enough liability coverage, thus putting themselves at risk. Two years ago ACE surveyed more than 600 independent insurance agents about their HNW clients who were previously insured by mass-market carriers. Of the agents surveyed, 92 percent reported that their clients had inadequate liability coverage, 86 percent reported ineffective coverage of jewelry, art, wine and other collections, and 83 percent believed their HNW clients had insufficient coverage of their main home or vacation home.
That’s why Camp recommends that individuals work with an insurance agent familiar with the needs of HNW individuals – and that a qualified insurance agent be part of their wealth-management team, along with an attorney, accountant and financial planner.
Some people may also face additional exposure due to their lifestyle. If you have household employees, such as a housekeeper or nanny, consider additional liability coverage and workers’-compensation insurance. Those who travel to Latin America or other high-risk areas might want to consider kidnap and ransom insurance. Consult with a qualified insurance agent to ensure that you obtain coverage that fits your needs.
In addition, experts recommend that HNW individuals (and others too) obtain an umbrella policy in an amount that will protect all of their assets and takes into account their future income and earning potential. It’s important to review that coverage at least once a year. As income goes up and assets accrue, coverage also should increase.
Here’s what experts say you should insure to protect your assets:
• Your homes – all of them. That includes your primary residence, vacation homes and even an RV, if you own one.
• Cars and boats – Vehicles and personal watercraft should be covered by policies that protect against damage and liability in the event of an accident.
• Jewelry –The average homeowners policy provides limited coverage for jewelry. For more expensive pieces, you can obtain scheduled coverage, which assigns a value to a specific piece based on an appraisal.
• Collectibles – Whether it’s art, wine, stamps, coins or other valuable collectibles, your standard homeowners insurance policy may not provide sufficient coverage. Instead, a high-value collections policy may be necessary. Once you obtain one, keep the policy current with appraisals every few years.