Why Wealthy Families Need More Insurance

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In my luckily CHOSEN career, I have Insured across the spectrum of every household imaginable. Everything from newlyweds with a starter home to Politicians, Actors, Athletes, Executives of Publicly Traded Companies and Founders of Large Privately Held Corporations.

This experience allows me to tell you in a straightforward manner that ” most successful people ” are vastly underinsured.

Below is an article from my blog Why Wealthy Families need more Insurance.

Although many people assume America’s wealthiest families have nothing to worry about, they do have to worry about being targets of significant liability lawsuits. The high unemployment rates and unsteady economy have contributed greatly to these realistic fears. Unfortunately, many wealthy families do not have ample protection against such lawsuits. They also underestimate the cost of potential damages and how affordable protection is in comparison with those damages.

A recent study performed by ACE Private Risk Services found that half of the people interviewed thought the worst lawsuit they could possibly face would be less than $5 million. However, the grim reality is that lawsuit awards for serious injuries are often much higher than that amount. The individuals interviewed in the study belonged to households with more than $5 million in assets. ACE’s study sought to uncover the threat perceptions of these wealthy families. With the nation’s discourse over wealth disparity, the findings show that rich families feel they are increasingly targeted for lawsuits. Approximately 80 percent of wealthy individuals feel their money puts them at a higher risk. More than 65 percent of the individuals interviewed felt that the nation’s view of the wealthy has become more negative since 2008. In addition to this, almost 40 percent feel they are more likely to face lawsuits during the next several years.

Since some wealthy families underestimate all types of liabilities, they are more likely to carry insufficient insurance policies. This is true with homeowners coverage, auto insurance and several other types of coverage. More than 40 percent of the survey participants reported carrying under $5 million in umbrella liability coverage. In addition to this, more than 20 percent said they did not have an umbrella policy at all. For those who are not familiar with this type of insurance, it is a crucial component of personal coverage. In the event an incident consumes the maximum amount allowed by an individual policy, the umbrella policy provides extra coverage. How much additional coverage it provides depends on what type of policy is purchased. Wealthier individuals should have umbrella policies that are significant enough to protect their assets. Keep in mind that auto or homeowners policies rarely exceed $500,000 alone. There are several companies specializing in umbrella policies for wealthy families whose net worth is beyond $1 million. These companies offer policies covering between $1 million and $100 million. Premiums for such policies are higher than average, but choosing a larger deductible brings lower premium amounts.

Selecting a plan with a higher deductible and paying for small losses is a responsible choice. Wealthy families must understand where their lawsuit risks are coming from. The survey shows that more than 50 percent of these families have employees. Gardeners, housekeepers and nannies are all staff members who could become disgruntled enough to file a lawsuit. In many cases, the allegations may not even be true. Sexual harassment, wrongful employment practices, wrongful termination and discrimination are common allegations in such lawsuits. Wealthy individuals who serve as trustees of charitable organizations must also consider the organization’s directors and officers coverage, which may not be significant enough for individual protection. Auto accidents, dog bites, character defamation and slander are also common lawsuit sources. The risks are evolving constantly, and it is crucial to be properly insured.

Allow me to end this document with the statement of truth that ” If your insurance is done correctly – you can get a lot more insurance for much, much less premium “Remember to buy the agent, not the insurance. If you have exposure questions that your current agent cannot answer – send it to us. We would be happy to assist.jefferyarnold.com We Provide coverage throughout the United States and 54 countries worldwide.

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P.P.S. My Daughter ( my youngest of four children ) asked me at dinner the other night if she can put a picture on the interweb. I said no, but promised I would post one for her. So, below I am keeping that promise.

 

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