High net worth individuals and their families often have more to protect, and as a result have a greater potential for loss, or becoming the target of frivolous lawsuits due to their relative position in the community.
But being prepared for a “worst-case scenario” is often more reasonable than people think — especially in the event of a claim, when comprehensive protection may prove invaluable.
The Problem With Mass Market Insurance
In a recent report, it was found that high net worth clients, including those in New Mexico, are consistently underinsured— as well as overpaying for insufficient coverage — when it comes to coverage provided by standard insurance carriers via direct writing companies or captive agencies.
One reason lies with the agent who provided the coverage: Clients with substantial assets are rarely encouraged to adjust their personal insurance as their lifestyle changes.
Nobody wants to think about the possibility of bad things happening, and most agents do not have the experience to help their client deal with the complexities of high net worth insurance contracts, a specialized field.
Another reason is mass-market carriers are accustomed to providing a “one size fits all” product for households with far fewer assets, and less complicated financial profiles.
Even the largest mass-market carriers are inexperienced providing coverage on homes with a replacement value over 1 million dollars that may house jewelry, gold and collections, or households that employ domestic staff, or individuals who sit on boards of not-for-profits or other organizations.
The sad result is that year after year, high net worth households in New Mexico unwittingly volunteer to bear more and more personal risk.
At-Risk and Still Underinsured
Affluent individuals face unique insurance challenges and tend to have coverage spread out over several carriers and insurance products, further complicating an already complex risk management, and often potentially ignoring less obvious needs for catastrophic insurance coverage. These may include:
Overinsuring against minor threats and underinsuring against major ones. High-net-worth insurance policy experts are trained to normalize the relationship between needs and coverage,
Underinsuring possessions and hobbies. Wine collections, art, horses, yachts and car collections are easy to forget to insure—or underinsure since there is no process for obtaining market or noting all hard-to-replace possessions, or safeguards against accidents or theft by cleaning staff.
Underestimating estate taxes is another frequently misunderstood opportunity, since many high net worth carriers don’t offer life insurance. However, even if your estate is large enough to financially protect your children and spouse, the not-so-obvious benefit of life insurance is to spare the burden of estate taxes that are often 50% of net worth or higher‑ and for those who improperly protect possessions, or fail to name beneficiaries, taxes can be much higher.
Insufficient umbrella coverage—it costs nothing for someone to initiate a lawsuit against you. Liability coverage from home or auto insurance rarely exceeds $500,000. So just like the name implies, umbrella provides surprisingly affordable protection against a wide range of potential financial dangers, and unforeseeable mishaps, like:
- Injuries you cause in a car accident, or that someone suffers on your property
- Property damage caused in an accident
- Property damage caused by dependants, pets, vehicles
- Attorney fees and other legal costs if you’re sued
Underestimating jury awards and settlements. Awards often greatly exceed what affluent families imagine as the worst case scenario. For example, in one liability risk survey, half thought that the highest amount of damages they could be held liable for in an accident involving serious injury was less than $5 million. Except jury awards and settlements have reached in excess of $45 million where affluent individuals have been involved.
Your home tends to be the most valuable asset and the most important to cover. But if you have coverage spread out over several mass-market carriers, you may not earn package discounts, or receive the premium credits for alarm systems and other loss prevention devices
What to Expect with Reynolds + Rodar Insurance Group
- Flexibility on replacement, rebuild or cash settlement—you decide when and how you deal with your property after a covered loss.
- Guaranteed Rebuilding Cost (GRC) to ensure your home will be rebuilt in like kind and quality even when the actual cost to do so proves greater than your coverage limit.
- Deductible waiver on larger losses several of our specialty companies will waive your homeowner deductible for large losses over $50,000
- Comprehensive coverage option for all appliances including mechanical, electrical, or pressure breakdowns.
- Jewelry protection is often insufficient when it comes to mass-market policies, which typically cap coverage for jewelry much lower than our clients require. IN most cases, we can extend coverage up to $50,000 for lost, misplaced or stolen jewelry.
- Neighborly settlements in cases of a burst pipe, leaking appliance, or other covered loss occurring in your condo, townhouse or apartment that damages a neighbor’s property.
- Pet injuries requiring medical care due to a covered loss.
- And much more…
Why you can trust Reynolds + Rodar a Gallagher Company
We are successor to the same locally owned agency founded in 1882.
We partner with the very best insurance carriers, including CHUBB, PURE, ACE, Nationwide Private Client and more.
Custom homes deserve custom insurance, and we are the leaders in New Mexico for insuring high value homes.
Learn more about protecting your home and lifestyle with a customized high net worth insurance policy from Reynolds + Rodar Insurance Group Inc. Call our Santa Fe, New Mexico office today at 505-983-4353 to learn more about our products and rates. You can also fill out our easy online form for quotes and more information.