Coverage to Consider for Your High-Net-Worth Lifestyle
We have partnered with some of the most specialized insurance companies in the country to offer a policy that's a cut above the rest for successful families. When assessing home and auto insurance policies for successful families, it's important to focus on some of the key coverage points that may be included in a policy. Below are our recommendations for a private client family to consider. Mass-market carriers most likely won't have all of these coverage options available at the proper limits for an accomplished individual's needs. Not all of these coverage's may be necessary (based on your desired lifestyle and individual needs), which is why we recommend you consult with a private client risk advisor.
Homeowner's Policy for Accomplished Individuals
Open Perils form provides protection from all types of losses ... except for anything specifically excluded in the policy. Basically, this form is built with a core of property exclusions meaning everything else is covered and is more robust than what is called a "named perils" policy form (which provides coverage for only the types of losses specifically named in the policy and excludes everything else).
Medical payments coverage exists on all homeowners policies, but an accomplished individual should pay attention to the limits on the policy.
- We recommend at least a $5,000 limit
This provides coverage for medical payments if a guest is injured on your property, and is a highly liquid coverage, regardless of fault. It is considered a "good faith" payment to help you avoid litigation.
Most standard policies have only a $1,000 limit, which won't cover all medical expenses from some minor injuries today ... even if the guest only needs a few stitches.
Loss of use coverage provides coverage for any additional expenses you incur as a result of a covered loss. This is specifically for additional money spent, so if your family typically spends $250 per week on groceries but has to spend $400 eating out instead, this coverage would reimburse $150 for the additional out-of-pocket expense. Additional areas where loss of use typically provides reimbursement includes:
-- Hotel or rental home charges
-- Additional car mileage
-- Increase in utility expenses
Personal liability coverage is in place to protect you in case you are liable for an injury or property damage.
- We recommend at least $500,000 in liability coverage.
This type of coverage deals with medical bills, pain and suffering, lost wages, and property damage from an injured third party. It will also provide coverage for death benefits and legal costs.
If you own a dog, you should have more personal liability coverage in place. According to the Insurance Information Institute, around 1/3rd of all personal liability claims are related to dog bites.
An extended replacement cost policy will pay up to a specified percentage (typically around 125%) over the dwelling limit in order to fully replace a damaged home. This coverage is especially helpful at times of widespread losses in an area that may cause a spike in material and labor costs to rebuild a home.
Identity theft coverage provides assistance in recovering after your identity is stolen. This includes:
-- Credit restoration assistance
-- Coordination with banks, credit card companies and/or lenders to waive false charges
Although it may not sound like an important piece of coverage, building ordinance or law can be a critical component during a significant claim.
This coverage comes into play when an ordinance or law regulates improvements with the construction of a damaged building. Oftentimes, an older building will require upgrades during the repair process to meet newer building codes.
In addition, this coverage can come into play when a home is significantly damaged, but still partially standing. It's typical for communities to have a building ordinance that requires a home damaged by 50% or more be demolished and rebuilt in accordance with current building codes rather than simply repaired. The demolition and additional expenses to match new building codes may not be covered without this endorsement.
This coverage depends a little on where you live, but if you're anywhere near a fault line it should be a must. In the St. Louis, MO area, every homeowner should have earthquake coverage in place. The main point of insurance is to protect yourself if something catastrophic happens, and an earthquake should fit everyone's definition of that.
Water and Sewer back up coverage comes into play when water or sewage backs into your home, usually from a sump pump failure.
Most insurance policies exclude this coverage and it would not be covered by flood insurance, potentially leaving you with a major mess ... both physically and financially.
"But I don't have a finished basement, so this would never happen to me." -- says the homeowner.
Water and sewer backups can happen to anyone, regardless if they have a basement or even if they live at the top of a hill on a slab.
While you may not own any single individual piece of jewelry, art or other collectible of massive value, the odds are pretty good that you have enough of these smaller ticket items that a loss would still be impactful. According to a recent private client study, nearly 90% of those surveyed had collections of such items that exceeded $25,000.
One other added bonus is that some carriers will offer a discount on the homeowners policy of up to 10% when it is paired with a collectibles policy. In many cases, it's actually cheaper to have both policies in force with a carrier than to have just the homeowners policy!
A flood policy shouldn't be limited to only homeowners who live in a dedicated flood plain. In fact, anyone with a finished basement should strongly consider adding a flood endorsement to their policy (if available by the carrier). According to CHUBB, 76% of successful families lack flood coverage.
As the weather continues to change, one thing we've learned is flooding can happen well beyond anywhere that was previously thought. Hurricanes Harvey (2017) and Florence (2018) both resulted in unprecedented flooding that hit areas well outside of any flood plain boundary. St. Louis saw two 500-year floods hit within an 18-month window.
When water from heavy rains sneaks in through a window in your basement ... that's groundwater and it's only covered by flood insurance.
For a high net worth client living outside of a dedicated flood zone and with a finished basement -- adding flood coverage to their policy is an affordable common-sense solution.
We're only including this in the "worth considering" category because many insurance companies don't offer coverage for sinkhole or mine subsidence. While these claims don't arise often, if a sinkhole did happen to open under your home -- you're going to wish you had insurance to cover the damage.
This coverage provides protection for employees that you personally hire to work in your home. Common examples include:
-- Home Health Aide
Workers compensation will pay for medical expenses and a percentage of lost wages if an employee gets hurt while working for your family.
According to a recent CHUBB study, only 6% of high net worth individuals had purchased employment practices liability insurance coverage (EPLI).
EPLI provides coverage for claims of wrongful acts during the employment process. Most importantly, EPLI provides defense costs (within the limits) for claims of wrongful acts. Typical examples of claims that might be leveraged against a successful family include:
-- Wrongful termination
-- Sexual harassment
-- Invasion of Privacy
Most travel insurance plans cover trip cancellation, trip interruption, baggage delay or lost baggage benefits ... along with travel and medical assistance services. Some more robust policies also include accident and medical benefits as well. Most of these benefits and services aren't typically available through your healthcare, homeowners or auto insurance while traveling abroad.
The traditional homeowner's insurance policy does not provide any coverage for landslide or earth movement. One common misconception is this type of coverage isn't important in the Midwest.
Many of the beautiful secondary homes sitting at the Lake of the Ozarks (MO) are on bedrock that isn't overly stable. A landslide or shifting of that surface can cause a total loss of a home which is typically not covered. In fact, there are multiple active claims and lawsuits in Missouri currently for landslide-related losses.
Directors and Officers (D&O) coverage is important for accomplished individuals who give back to their community by serving on non-profit boards.
Most charitable organizations have a specific D&O policy limit of $1 million, but in the event of a major lawsuit against the board, the board's coverage may run out. You have basically signed up your personal assets if anything goes array from a bad decision, so having personal D&O coverage endorsed to the homeowners will protect your assets if the board doesn't have enough coverage.
If your home has a basement, Hydrostatic Pressure Coverage (or seepage) is a must. Hydrostatic Pressure happens when there is a lot of rain in the area and the water has nowhere to go ... until that pressure builds up and water slips through a small crack in the foundation from settling.
If you have a finished basement, you won't see this water sneaking into your house ... until mold starts to build up on the drywall in your basement.
Service line coverage will provide assistance for damage to any underground service line leading into your house. Common service lines that can be damaged include:
-- Plumbing/sewer lines
-- Electrical lines
St. Louis is one of the larger metropolitan areas that still has the original sewer system, and because of the age and over use on the system, it's struggling. Many homeowners in STL are dealing with issues and this coverage would pay for the dig up and repair of that pipe or service line all the way from the house to where the city begins service.
This option isn't available with all carriers, so check with your personal risk advisor to see if your insurance company can offer this option. The cash-out option is a feature that a client could use in the event they suffer a total loss with their home.
Instead of rebuilding, the client can choose to take the money due to them from the insurance company and move wherever they please.
One important piece to note is there are certain limitations on the types of total loss that would allow this provision to be exercised and not all carriers offer this option.
Auto Insurance for Accomplished Individuals
POWERS Insurance recommends limits of at least 250K per bodily injury/500K total bodily injury/250k property damage limits ... or $500K Combined Single Limit
This is the primary piece of an auto insurance policy. It means that, for each accident, the policy will pay a maximum of $250,000 per person who suffers a bodily injury. The maximum payout will be $500,000 for bodily injury (regardless of how many people are hurt). Finally, the most the policy will pay for property damage is $250,000.
Another option for limits would be called combined single limit coverage. We recommend $500,000 of CSL coverage. With this limit, the carrier will pay a total of $500,000, regardless of bodily injury vs. property damage.
Uninsured and underinsured motorist helps provide protection for you and your passengers if you are hit by someone who either doesn't have insurance or is carrying too low of limits on their auto insurance.
According to a recent CHUBB study roughly 1 of every 8 drivers on the road don't have insurance in place, and another large percentage of the population carries state minimum limits.
Roadside assistance coverage can be a helpful giveback to an accomplished individual in a time of need.
After an accident, it's nice to know there is coverage in place to help tow the car away or be there in an emergency breakdown.
Rental car reimbursement is one of the most commonly declined options in auto insurance, but it shouldn't be for your lifestyle. If you are in an accident and your car is in the shop (even for a few days), it can cause an unnecessary inconvenience to try to find alternative transportation needs. This is a pretty affordable option that allows you to easily maintain your current lifestyle.
There's never a convenient time to have a window break on your vehicle! This usually happens when you're driving down the road and a rock kicks up ... or even when a thief breaks into your car.
With full glass coverage, you pay no deductible at the time of loss. You can also have chips in your windshield repaired at no out-of-pocket expense.
With Agreed Value coverage in place, you and the insurance company agree on the value of the car when you purchase your policy and that amount doesn't decrease over time (so you aren't losing that value in a car the moment you drive it off a lot). This coverage is especially important if you own a rare or classic car, where finding market value for the vehicle could be tricky at a time of loss.
OEM Parts stands for Original Equipment Manufacturer Parts. This means that the insurance company will only repair your vehicle with the original parts that should go in the car. Without this coverage in place, the insurance company will only pay for an auto repair shop to use aftermarket parts to fix your vehicle.
Repairing a vehicle with aftermarket parts will lower the resale value of your car and could void several warranties. It also makes the vehicle less safe should you get into another accident in the future.
This coverage is especially important if you have a higher-end vehicle or an imported automobile.
Accident forgiveness is already pretty well defined within its title. This means if you have an accident and/or minor violation, the insurance company won't raise your rates because of the claim (though rates may still rise through natural rate implications).
A total loss waiver means the insurance company will waive any deductible you have on your vehicle if you suffer a total loss.
Basically, if you've just suffered a $61,000 loss on your car, the insurance company isn't going to penny-pinch you over your $1,000 deductible.
For autos that you own outright, it's your option if you want to carry comprehensive/collision coverage. The need for that coverage completely depends on your lifestyle.
Many accomplished individuals choose to carry liability-only coverage because they know they can replace their auto on their own dime and would rather reinvest their money in the market. In other words, they are willing to absorb the physical damage risk of their vehicle themselves but cover the larger exposure which is liability.
Other accomplished individuals prefer to keep the comprehensive coverage in force so they wouldn't risk losing the equity in their vehicle.
Don't get caught in the trap of buying gap insurance from the auto dealership! Gap insurance coverage helps make sure that you aren't upside down on a loan at the time of loss.
This coverage is especially important in the first year or two of owning a new car (where the value is usually several thousand dollars less than what's owed on the vehicle). This coverage is commonly offered as a standalone policy at the dealership and while the coverage is the same, you end up paying more premium for that coverage and also would have to coordinate with multiple companies in the event of a total loss.
Replacement Cost coverage is very similar to agreed value coverage, however it is intended primarily for newer vehicles. With replacement cost coverage, if you suffer a total loss on your vehicle, the insurance company will pay you what it will cost at the going rate for the same year/make/model vehicle.
Umbrella (Excess Liability) Insurance for Accomplished Individuals
As risk managers, we understand that liability is the one thing that can't be measured. If you are in a car accident, there is no way to project what type of car you are going to hit and who's going to be inside that vehicle.
What we can measure is your net worth, which is what can potentially be at risk. We recommend that a client have an umbrella in place that will cover their successful family up to their total net worth, and young families should consider future earning potential for the household.
Excess coverage for uninsured and underinsured coverage endorsed to your umbrella policy will give your successful family an added layer of protection if you are hit by someone who doesn't have the proper protection in place. With how easy it is to buy a state minimum auto policy online, this is one of the largest and most common catastrophic exposures for a successful family.
Having Directors and Officers coverage in place on your homeowners policy is a great first step, but you are still exposed if you don't have an adequate umbrella policy in place. If you make a decision for the non-profit that results in damage to someone else, they may be able to go after your personal worth.
Additional coverage with excess liability coverage can be helpful in an employment practices liability suit ... where defense costs can mount rapidly and the process can drag on for extended lengths of time. A successful family can become a target for lawsuits such as discrimination, wrongful termination of a domestic employee, sexual harassment, bullying, defamation, invasion of privacy or retaliation.
Similar to the coverage for uninsured motorists, third-party liability will provide coverage for you if you are injured on someone else's property without proper coverage in place. An example where this could come into play would be if you attend a party at someone else's home. Everyone is hanging out on the back deck when suddenly the deck collapses and all 25 people are hurt from the fall. A basic homeowner's policy could have those liability limits exhausted well before everyone's medical bills are paid.
Ask a Risk Advisor to contact you today!
Start our complimentary personal risk assessment review process by completing the basic information, then one of our risk advisors will call you.