L&T Blog

Four Types of Insurance High-Net-Worth Individuals Should Consider

July 25, 2019

By Laurie Haas - Vice President, Private Risk Services

Did you know that as your wealth increases, so does your exposure to risk?

It’s true – high-net-worth individuals and families are frequently targeted with lawsuits due to their wealth and the potential lucrative payout. And while you might feel financially secure with plenty of cash in the bank, having appropriate insurances can bring additional peace-of-mind and protections for life’s unexpected events.

1: Personal Umbrella/Excess Liability/Personal Catastrophe Coverage

This type of policy provides liability limits beyond the amount provided by a typical home and auto insurance policy. An umbrella policy affords additional coverage when the primary insurance limit is exhausted, including coverage not found in your primary policy. For full protection, it’s important that the legal defense costs are included outside of the policy limits of coverage.

Say you’re hosting a party at your house and a guest suffers an injury. If you’re subsequently found liable, an umbrella policy could be extremely beneficial as it covers the cost of a judgement entered against you up to the limit of liability. The umbrella policy generally covers you and family members if found negligent for accidental injuries to the party guest.

Furthermore, with social media, slander and defamation suits are more common now than ever. If you or a family member are sued because of a social post that is perceived to damage someone’s reputation, this policy can add a valuable line of defense.

2: Excess Uninsured/Underinsured Coverage

What happens if an uninsured or underinsured party is responsible for damages sustained by you? This type of policy can help you avoid excess costs out-of-pocket. Excess uninsured or underinsured coverage is ideal for unfortunate situations such as a swimming pool mishap away from your residence, auto accidents or if you suffer an injury at someone else’s party. If your injury is severe and prevents you from working long-term, this type of policy can cover the loss of income for you and your loved ones.

3: Luxury Items

You’ve worked hard for your possessions – make sure they’re protected too. Luxury item policies retain coverage for belongings like boats or recreational vehicles. It can also cover an irreplaceable art collection or treasured family heirlooms (grandma’s jewelry, vintage furs) passed from one generation to another. Some specific policies also extend to your wine cellar and can cover issues like spoilage.

4: Homeowners Insurance

While a home may be valued at $1 million, it could cost $4 million to rebuild with all the bells and whistles. Surprisingly, many high-valued homes are underinsured. High-net-worth homeowners can benefit from a policy that includes guaranteed replacement costs with no cap, as their home’s market value and replacement costs vary significantly.

Ensure your wealth and hard-earned lifestyle is preserved, even when accidents happen. Speak with an experienced insurance broker to clarify what insurance coverage best fits your personal circumstances and needs.