Insuring your assets and mitigating the hidden risks of a liability lawsuit
By Tommy Suggs
No matter your business sector, for a professional, each workday is dedicated to doing your job well. So, how do you protect your assets with a busy schedule?
According to a recent survey, more than 50 percent of wealthy households believe that their lifestyle and assets make them a prime target for lawsuits. Many affluent families have worked hard to enjoy their lifestyles and have significant assets and family members to protect.
Looking at the physical asset risks—as well as the financial and family risks—can aid in resilience after a loss. Being smarter about risk and finding out what is important to an individual in regards to their lifestyle also plays a critical role in minimizing risk and designing an insurance plan personalized for them.
For any insurance brokerage, the key role of an advisor is to recognize the unique needs of high net worth clients. Any insurance brokerage worth its salt will have a specialized program for certain clients who have more assets, risks, and needs than most. An individual’s asset accumulation and family portfolio require special insurance knowledge, coverage, and consideration.
Many individuals get so caught up in insuring their homes and automobiles that they forget about the other assets they have collected over time, such as artwork, jewelry, and wine. Meanwhile, the details pertaining to coverage for aircraft and marine vessels can be highly technical and, frankly, a bit overwhelming if you’re not a seasoned insurance broker.
More than half of survey respondents underestimated the potential cost of a liability lawsuit, while more than 40 percent of respondents, all with net worth exceeding $5 million, had less than $5 million in liability coverage. Some didn’t even know how much coverage they were carrying. The lack of awareness of real-word threats to their assets and lifestyle is a disturbing trend backed up by recent real-world, larger claims scenarios:
- Homeowners Insurance: The insured’s son had a friend over for a play date. While playing with the family dog, the friend’s face was bitten, resulting in multiple reconstructive surgeries. The injured child’s parents were awarded $10 million.
- Automobile Insurance: The insured was driving on the highway and accidentally drifted over the centerline hitting an oncoming car, killing the driver. The family of the young woman who was killed was awarded $21 million.
- Yacht Insurance: Two individuals who were swept off of a yacht and injured by the propellers were awarded $31 million.
Policies covering homes, autos, boats, art collections, etc. are essential, but having the proper personal excess liability policy (also known as umbrella coverage) is the most effective way to protect one’s wealth and assets.
Helping individuals understand the ways cyber criminals target individuals and which risks are most prevalent are key. Simply downloading a new application or clicking on a deceptive email link can set off a destructive and potentially ruinous chain reaction, which can include the following:
- Unauthorized access and usage of personal data
- Financial account hacking and subsequent loss of funds
- Online harassment from cyberbullying
- Malware-infected home networks, ransomware
Hidden exposures have the potential to threaten a person’s existing wealth, as well as the legacy they plan to leave.
A good advisor understands that clients are just too busy to sort through the hundreds of options for mitigating risk. It’s important to work with a brokerage that can provide professionally tailored insurance solutions for each client, working with them and their families through life’s events to analyze and explain their risks and provide options to insure their lives and assets.
Whatever your needs may be, an advisor should work hard to find a sound solution by leveraging the vast resources available to create an effective risk management program tailored to your needs. Make a plan for your future and talk to a trusted insurance advisor to start planning today.