While most individuals and families don’t think of themselves in terms of labels like “high net worth,” many people meet the definition just based on the value of their investments. Once you add in non-liquid assets like real estate, total net worth can become quite high, even for people who don’t consider themselves wealthy.
More assets means more complexity when it comes to reducing your risk and protecting your assets. Yet, it’s common for people to continue purchasing the same basic insurance coverage that served them well when they had far fewer assets. That’s especially true if you’ve been renewing the same policies year after year.
Though everyone’s situation is unique, most people with substantial assets find these four coverages are essential to protecting what they’ve accumulated.
1. Umbrella Liability Insurance
No one likes to think about the possibility of being sued. However, it happens frequently in our litigious society, and the resulting jury awards and settlements can be astronomical. The greater your assets, the more likely you’ll be hit with a liability claim if you cause a vehicle crash that results in injuries or death, or someone is injured on your property.
Your auto and homeowner’s insurance policies provide a limited amount of liability protection: “limited” being the operative word. Even a $1 million lawsuit would exceed most auto or homeowner’s liability limits, and these cases often result in multi-million-dollar settlements or verdicts. That’s why people with significant assets need umbrella liability insurance.
An umbrella policy sits on top of your auto and homeowner’s policies to provide additional coverage beyond the liability limits those policies provide. Exactly how much coverage you need depends not only on the value of your assets, but also your risk profile. For example, a family with multiple teen drivers is at higher risk of a liability claim due to their greater risk of a vehicle crash. High-risk hobbies also can increase your odds of a lawsuit if those activities have the potential to cause injury to others.
Determining the right amount of umbrella insurance coverage isn’t a straightforward calculation, so it’s best to work with an independent insurance advisor to ensure you’re adequately protected.
2. High-Value Homeowner’s Insurance
Many carriers offer homeowner’s insurance online with a few clicks, but those policies aren’t designed for high-value properties. If your home has high-end custom features or separate outbuildings—or you’re a collector of expensive fine art, wine, or antiques—a basic policy’s exclusions and limitations will leave you with gaps that will prove costly if you have a loss. And given how dramatically residential real estate values have risen in some regions—and the effects of inflation on building materials and construction labor—the cost to rebuild a home today often exceeds the policy limits most people carry. If you haven’t revisited your homeowner’s policy in a while, odds are high that your property is now underinsured.
A homeowner’s policy designed for high-value properties avoids these pitfalls by closing common gaps. For example, these policies typically offer endorsements and higher limits for collectibles. So, if you have a wine cellar stocked with rare vintages, and those wines spoil during an extended power failure, you’ll have much better coverage. High-value homeowner’s policies also provide better coverage for loss of use of your home while it’s being repaired or rebuilt. With construction lead times longer than most people anticipate, having sufficient loss of use coverage can save a significant amount of money. It’s equally important to ensure that your home is insured to value, to avoid the unpleasant surprise of discovering it will cost more to rebuild your home after a total loss than your insurance policy will pay out.
With complex considerations like these, buying homeowner’s insurance online without guidance is a risky proposition for owners of high-value homes. An independent insurance advisor can assess your exposures, tap into their relationships with insurers that specialize in high-value property coverage, and identify a policy that addresses all your needs.
3. Workers’ Compensation Insurance
If you don’t run a business, you might not think of yourself as an employer. But if you hire a housekeeper to clean your home periodically or a nanny to care for your children, it’s likely you need workers’ compensation insurance.
In many states, you’re required to purchase workers’ compensation insurance to cover domestic employees such as these. If you don’t carry the required coverage and a domestic employee is injured on your property, your homeowner’s policy won’t cover the claim. And even in states where these claims are covered by homeowner’s insurance, it’s not ideal to rely on this policy for domestic employee injury claims. A history of claims places you at risk of losing your property insurance at renewal, making it difficult to find another carrier willing to insure you.
Workers’ compensation insurance will cover the medical costs and lost wages resulting from a domestic employee’s injury. Since every state’s requirements vary when it comes to worker’s comp, it’s best to ask an independent insurance advisor for guidance.
4. Cyber Insurance
Ransomware attacks are back on the rise (after a brief lull) and social engineering scams are growing more common—where a bad actor gains your trust and gets you to willingly give up your security credentials or directly transfer funds to them. Cybercriminals are increasingly creative in their approaches, and people with substantial assets make lucrative targets.
For instance, a cybercriminal can find out that you’re buying a home, send an email posing as your lender, and request that you wire your deposit funds to them. Or they might monitor your social media presence, claim to be stalking your children or other family members, and attempt to extort money in exchange for leaving them unharmed.
With the cybersecurity landscape growing riskier all the time, individuals and families with considerable assets need cyber insurance that protects against common exposures. While a standard homeowner’s policy might include limited cyber coverage, you can typically obtain coverage for a broader range of cyber incident types, at higher limits, if you buy a stand-alone policy or add cyber coverage to a high-value homeowner’s policy.
How an Independent Insurance Advisor Can Help
Finding the right insurance advisor to protect your high-net-worth assets is critical to guard against risks that could jeopardize what you’ve worked to accumulate. Many successful individuals and families choose B. F. Saul Insurance as the trusted partner to help safeguard their assets and deliver peace of mind in a complex, volatile world.
B. F. Saul works with carriers that cater to the high-net-worth market, giving us access to the right coverage to protect individuals and families with considerable assets. We ask questions about your assets and lifestyle, assess your exposures and risk tolerance, and recommend the best policies and limits to suit your needs. Our highly experienced team will even suggest ways to reduce your risk and your premiums, so you can obtain the best coverage at the best price.
Trust B. F. Saul Insurance to help protect your assets with the right insurance coverage. Contact us to learn more!
Jean Satterfield is a Personal Lines VP & Account Executive at B. F. Saul Insurance with over 40 years of experience in the insurance industry. Throughout her career, she has worked in various areas of insurance, including malpractice and small business insurance, but her primary focus has been on personal insurance. She specializes in serving the insurance needs of high-net-worth families and her key responsibilities include assessing coverage requirements, researching and presenting optimal solutions, and guiding clients through the claims process when necessary.