Homeownership is one of the most significant investments anyone makes; however, most homeowners are underinsured.
An underinsured homeowner has insurance coverage, but that coverage is insufficient. In a worst-case scenario, underinsured homeowners may have to pay tens of thousands of dollars or more out of their own pockets.
While many high-net-worth homeowners have access to experts—attorneys, financial planners, risk managers—many are still underinsured.
For example, take flood insurance. A 2017 survey released by the Insurance Information Institute discovered that nearly half of all American homeowners incorrectly believe their homeowner insurance policy covers them against flooding. It doesn’t; you need a specific flood insurance policy.
An annual insurance review becomes more important as individuals build wealth and enter the high-net-worth category.
Five Policies High-Net-Worth Individuals May Need
1) Excess Flood Insurance
Severe weather and land development are increasing the risk of floods. Flood insurance purchased through the National Flood Insurance Program has maximum coverage limits of up to $250,000 for the building and $100,000 for the contents. Excess flood policies through private insurers will be better suited to meet high-net-worth needs. Some insurers provide up to $15 million in total property coverage, although it will cost more in total premiums.
2) Collectibles Coverage
Whether your valuables consist of jewelry, classic cars, fine art, or wine, high-net-worth individuals likely need valuable articles or collectibles coverage to insure items to their total value. A standard homeowners insurance policy caps these items. Whereas collections policies will often offer coverage limits that match the collection’s appraised value.
3) Excess or Umbrella Liability
Given our litigious society, high-net-worth individuals are often targets for lawsuits. An umbrella insurance policy provides extra protection on top of your underlying policies, such as homeowners, in case they are insufficient to cover the cost of an unexpected lawsuit or accident. Some carriers will include defense costs for a lawsuit, even if it is groundless. This excess liability insurance may also provide payments for when others don’t have enough coverage.
4) Workers’ Compensation
Acquiring wealth through career success often means having limited time. Household staff fill critical roles, such as housekeepers, nannies, and personal assistants. Workers’ compensation insurance is vital and required by law in most states. Workers comp covers medical expenses and lost wages if a household employee becomes ill or injured.
5) Personal Cyber Insurance
A personal cyber insurance policy could help protect you and your family recover from online mishaps. Every personal cyber policy varies, but coverage often includes losses from identity theft, cyberstalking or harassment, and cyber extortion. A policy and its particular endorsements will provide a more comprehensive range of protections. Many insurers offer cyber protection as an add-on to a homeowners policy.
High-Net-Worth Individuals Need Tailored Insurance
High-net-worth individuals face intensifying risks, and their insurance coverage requires customization. An experienced insurance advisor must understand how to structure insurance coverage to protect high-net-worth individuals’ unique lifestyles.
Contact the Premier Private Client Insurance Services experts to speak with a high-net-worth insurance advisor about your situation.
