2019 State of the Market: Personal Insurance for High Net Worth Individuals
America’s rich are getting richer…and younger. Technology and venture capital are creating more paths to wealth in recent years. Studies show that the number of high net worth individuals (HNWI) is on the rise.
Unfortunately, today’s millionaires and billionaires are also more vulnerable than ever before. Insurance exposures include catastrophic weather events, employee litigation, cyber-crime and more. Cookie-cutter insurance policies are not designed to contend with the complex risks that often come along with increased wealth.
If you’ve been sleeping, here’s your wake-up call.
Natural disasters are disrupting the insurance market, causing premiums to spike.
The impact of increasingly extreme weather events is rippling through the insurance market. Over the past few years, carriers didn’t fully contemplate or price for the kind of catastrophic losses we’re seeing today, particularly in coastal markets. This has led to intensified underwriting scrutiny and higher premiums as the carriers look to make up their losses.
Beware of vacancy-related issues for owners of multiple properties.
Many HNWI own multiple properties. From beach cottages to ski homes, secondary residences may be considered “vacant” if it is left empty for more than 60 days. Some insurance policies include vacancy and occupancy-related exclusions. These often go unnoticed by the policy-holder — until a loss occurs and is denied by the insurer.
Unoccupied properties are more exposed. With no one tending to them, unoccupied homes are considered a greater risk for perils like fire, vandalism and theft, water damage and weather-related risks. The risks are then compounded by the fact that damage may go undetected for some time and result in more severe losses.
When doing new construction or renovations that are extensive enough to lead you to move out of your home, you have a two part problem.
- Inherent risks associated with construction. Construction sites create special hazards — for which you could be liable. Your contractor may have insurance, but as the property owner you can still be impacted by exclusions in their policy. Does your contractors AND their subcontractors have comprehensive insurance? What potential risks are shifted to you? Being complacent about whom you’re hiring and how they’re covered could cost you millions in the event of an injury or other expensive loss.
- Vacancy concerns. Carriers are wary about insuring properties under construction for more than 60 days without occupancy.
Before hiring a contractor, ask your broker to carefully review the contractors’ policies as well as your own.
What does this mean for you?
Not all insurance carriers are able to serve the complex needs of HNWI individuals. These days you can shop for insurance online as easily as you’d order a pizza. But for HNWI individuals, this is not the best way to purchase something that amounts to the only protection you have on your most critical investments.
Work with a specialist broker who has access to a wide variety of niche products from multiple carriers in order to craft the perfect coverage portfolio for your situation.
You can’t predict the future, but you can protect it! Be proactive, and work with an experienced specialist broker who’ll ask the right questions.
Want to explore the custom coverage options that are right for you?
Contact Me Here or call (516) 390-3778.
Opinions expressed in this article are solely the author’s opinion. Not intended to provide the reader with legal or any other professional advice. Should you need advice or opinion, consult with a qualified professional to address your specific needs.