As your net worth grows and your personal exposures increase, it's more important than ever to have appropriate insurance coverage.
As your business grows, your personal assets often do, as well. When they do, you may need more personal insurance than you currently buy.
Sure, your business insurance broker may be taking great care of your business insurance needs. Too frequently, however, I find high-net worth (HNW) individuals ignore their personal insurance needs. This often occurs because they forget that, as their assets grow, they require a higher level of personal liability coverage.
Additionally, when business owners purchase recreational vehicles, horses, swimming pools, or travel abroad, they face new exposure to risks that their current personal insurance may not cover.
Growing Wealth Brings Growing Risks
The insurance industry offers customized coverage aimed at high net-worth individuals. Who are high net-worth clients, as they are often referred to in the insurance industry? Those whose individual net worth is between $1 and $10 million in investable assets, excluding their homes, qualify as HNW.
While that may not yet be you, you should still ensure you protect your personal assets with adequate insurance coverage.
Often, HNW clients do not understand the coverages they need. They may be insured with direct writers who do not work through agents. Or they may work with an agent that doesn’t insure their business—an agent they may have outgrown. Typically, as businesses grow, business owners focus on their business risks, perhaps forgetting that as their income grows, their personal risks grow, as well.
What coverages do you need as a HNW or soon-to-be HNW individual? First, an excess liability policy, often referred to as an “umbrella,” is a must. In today’s climate, it is easy to blow through policy limits of $100,000 or even $300,000 in a motor vehicle accident or other incident.
Next, as you acquire artwork or jewelry, you may need to schedule these items. Agents who insure HNW individuals offer several markets to insure those unique and expensive items that would have limited coverage under a traditional homeowner’s policy. Classic cars will require special coverage. So do boats, all-terrain vehicles and the other “toys” you may acquire as your net worth grows. “Green” additions to your home like geothermal heating or solar water heaters may require special coverage, as well. Additionally, social media activities of family members may pose liabilities.
HNW agents can also help to ensure you have coverage if a child posts something inappropriate in social media. Sitting on charity boards may pose added risks. Agents who traditionally deal with this exposure and other risks faced by the more affluent will be able to guide you in this arena.
Recent entrants into the insurance markets catering to HNWs have increased competition among carriers. Prices are actually quite competitive, according to HNW insurance experts. Now may be the time to show around, even if your personal policies do not renew for awhile.
You probably carefully analyze the risks you take in your business. As your net worth grows and your personal exposures increase, isn’t it time you talked to your agent to ensure you have the best personal coverage available?