Are You Covered? Assessing Insurance Needs for High-Net-Worth Individuals

Haas, LaurieBy Laurie Haas, Vice President of Private Risk Services, Lovitt & Touché

As wealth increases, so does exposure to risk. High-net-worth individuals and families are often targeted with lawsuits due to their wealth (and the potential lucrative payout), making it vital they consider additional coverage options to ensure their lifestyles and hard-earned assets are protected when unforeseen and unfortunate events occur.

Personal Umbrella/Excess Liability/Personal Catastrophe Coverage: This coverage provides personal liability limits well beyond the dollar amount provided by a typical home and auto insurance policy. When the primary insurance limit is exhausted, an umbrella policy affords additional coverage, including coverage not found in your primary policy in many instances. An umbrella policy generally covers you and family members residing in the household if found negligent for accidental injuries to another person or their property.

For example, let’s say you host a party in your home and a guest suffers an injury. If you are subsequently found liable, an umbrella policy will pay the cost of a judgment entered against you up to the limit of liability. Further, defamation and slander lawsuits are more prevalent today with social media. If you (or perhaps your child) are sued because of a post that is perceived to damage someone’s reputation, this type of coverage can defend against a personal injury claim. For full protection, it’s important that the legal defense costs are included outside of the policy limits of coverage.

Excess Uninsured/Underinsured Coverage:  This type of coverage protects you when another party is responsible for damages sustained by you, and either does not have any insurance or does not carry enough insurance. It’s not limited to auto accidents, as commonly associated. It also applies to a swimming pool mishap away from your residence, or if you suffer an injury at someone else’s home. Moreover, if your injury is severe and prevents you from working long-term, it can cover loss of income for you and your family. Without excess uninsured, these costs will come out of your pocket.

Luxury Items: There are specific policies to protect the luxury items we acquire. The importance of retaining coverage for big-ticket items, such as boats and recreational vehicles is fairly common knowledge, yet there are also policies specific to wine, which can cover issues like spoilage, or for fine art, furs and jewelry.

Homeowners Insurance: Surprisingly, high-valued homes are often underinsured. High-net-worth homeowners can benefit from a policy that includes guaranteed replacement costs with no cap, as the home’s market value and replacements costs can vary significantly. For example, a home may be valued at $1 million, yet it could cost $4 million to rebuild with all the bells and whistles. While most people have a contingency plan for an emergency, covering a shortfall in your insurance program is typically not one of them.

Wealth takes an incredible amount of time and energy to acquire, and insuring against life’s risks can ensure that your wealth and hard work is preserved when accidents happen.

Laurie Haas is Vice President of Private Risk Services at Lovitt & Touché and the only Arizona agent to hold the Certified Advisor of Personal Insurance (CAPI) designation. Lovitt & Touché offers comprehensive employee benefits solutions, property and casualty insurance, specialty insurance and risk solutions for business, personal insurance, and bonds and surety. More at