Many high net worth families fail to adjust their insurance portfolios to protect their assets as their wealth grows. This is not uncommon as life has a way of getting very busy. A lot of people think once they have an insurance agent who has set up a comprehensive insurance program, it is on auto-pilot. But life happens and things inevitably change, thus it makes sense to review and update your insurance program to make sure you in fact actually have comprehensive insurance coverage.
What Is Comprehensive Insurance Coverage?
Simply put, comprehensive insurance typically includes home insurance, auto insurance, collector car insurance, boat (yacht) insurance, valuables insurance and umbrella liability insurance. In some cases it can also include workers' compensation and employment practices liability insurance, cyber insurance, and directors and officers insurance. There are even more types of insurance, but this list gives you a good idea of the types of insurance I am referring to.
High Net Worth Families and Comprehensive Insurance
Most entrepreneurs, business owners, and high net worth people understand the concept of risk. They have almost certainly taken a high level of risk while working to increase their wealth and assets over time. They also understand that it makes sense to minimize their downside by insuring against risks. Insurance is not exactly fun or sexy to talk about, yet one of the first questions people ask when something bad happens is, "Is it insured? Am I covered?"
In other words, we all know insurance is important, we just don’t like talking about it. (For related reading, see: Ways to Make Insurance Exciting.)
Although I am not licensed to help people with this type of insurance, it is certainly a topic of conversation when building a financial plan. I work closely with a select group of insurance professionals that understand all the nuances of comprehensive insurance and make sure to bring them into the planning process should a client have potential needs or simply to conduct a thorough review of their current coverage.
In working with entrepreneurs, business owners, high net worth families and insurance professionals, I have learned that there are some specific questions people should be asking when reviewing or considering changing their comprehensive insurance coverage.
Do I Have the Right Insurance Coverage?
This is typically the first question high net worth families ask themselves and their insurance agent. Addressing the following questions when designing and implementing your comprehensive insurance portfolio will help you better figure out the best insurance package for you, what the deductibles will be and how the claims process works if something happens. Ultimately it should lead to a very strong and comprehensive insurance solution to protect you and your wealth.
12 Questions High Net Worth People Should Ask When Protecting Their Wealth and Assets
- Who is your current insurance carrier and insurance agent?
- Do you have umbrella liability coverage that matches your net worth?
- Does your umbrella policy include excess uninsured/underinsured motorist liability?
- Will your homeowner’s coverage pay to rebuild your home with similar quality materials and craftsmanship?
- If you recently expanded or upgraded your home, did you notify your insurance agent?
- If you own a wine collection, a significant amount of jewelry, artwork or other valuable items, are they insured adequately? (For related reading, see: Homeowner Insurance Gaps to Watch out for.)
- Do you have at least $1 million in uninsured/underinsured liability protection?
- If you employ domestic staff like a nanny, housekeeper, gardener, or chef, do you have employment practices liability and workers compensation insurance?
- If you serve on a board, do you understand the organization's insurance may not protect you from liability lawsuits that may be brought against it?
- Have you considered raising your insurance deductibles?
- Is all of your insurance coverage (home, auto, collector car, boat, valuables, umbrella, etc.) with the same carrier? (Life insurance does not need to be with the same carrier as there rarely is a discount for adding it to the insurance package.)
- Have you informed your insurance agent about any safety and loss prevention devices (security systems) in your home and autos?
Keep in mind that each person’s insurance portfolio will be different and unique to their needs. These questions are a great way to review and assess your current insurance coverage. Discussing all of this with your insurance agent, whether you already have one or are looking for a new one, will greatly improve the likelihood that you have the comprehensive insurance portfolio that is best for your situation.
(For more from this author, see: Sudden Wealth: How to Handle a Cash Influx.)