High-Net-Worth families demand the industry’s top talent and most knowledgeable advisors to help them manage their financial affairs. Simply put, they want the best-of-the-best. That is why you have been chosen among the hundreds of financial advisors in the Charleston, SC market to handle these matters for your clients. When dealing with insurance, this same level of demand is not as prevalent. Insurance advisors (often known as agents) can be viewed as transactional in nature and there is a common misconception that as long as one has coverage, it does not matter who is managing it. Your clients’ insurance advisors are often chosen based on location to home, mass-market media, or friend of a friend; rarely with a constructive method behind their decision as they did when hiring you. Just as you have built relationships with estate planning attorneys and tax accountants, so too should you work with an insurance partner that you trust and has the expertise of working with high-net-worth families.
The common theme
Home, auto, umbrella and valuables insurance is written and then often forgotten about. Renewals come and go and as long as things “appear” to be fine, policies are renewed for another year. Before long, four to five years have passed before a serious review takes place, if at all. Think about this: would you have a detailed financial review with your clients every four to five years? No…you meet with them throughout the year to ensure their assets are being managed according to their current lifestyle. This same level of detailed management should occur within their insurance program as well.
Types of Insurance Advisors
Just as there are many wealth and financial advisors for various niche groups and specialties, the same is true for insurance advisors; not every advisor is equal. Some are about volume, quantity and quirky commercials on TV, while others are about details, quality and exclusivity. Most insurance advisors that specialize in High-Net-Worth families often only accept a small handful of new clients each year to ensure each relationship is serviced appropriately. Similar to the number of investment companies, there are hundreds of insurance companies in the marketplace, but, there are only a few that understand and meet the needs of high-net-worth families. This is when working with an insurance advisor that understands High-Net-Worth families becomes crucial.
Insurance carriers that specialize in writing insurance for high-net-worth families have built specialty insurance policies that meet the unique needs of the affluent. To put this in context, a $2 million home is going to be built with higher quality products than a $300,000 home. If the higher valued home is not insured with an appropriate insurance carrier, your clients could face a long battle with the carrier under the “like kind and quality” section of their policy. The last thing your client wants is a home worth less after a claim- devaluing their worth. Scheduling valuables can also be a challenge for some insurance carriers in consideration of limits and valuation during claim time. Many carriers also limit their umbrella coverage to $5 million, which could leave your client extremely underinsured if their net-worth is significantly greater than this. High-Net-Worth insurance carriers understand the need for higher limits and can reach $100 million or greater limits of coverage, if needed.
Other questions to consider:
- What if your client sits on a board of a local non-profit, does their current policy respond properly?
- How does their insurance carrier handle domestic workers?
- What about estates acting as a business?
- What if they are in an auto accident with an uninsured driver, will their auto or umbrella policy trigger additional uninsured or underinsured coverage?
- Do they travel internationally?
These are just some of the questions a high-net-worth insurance advisor will pose to help build and structure a proper insurance program. Ensuring your clients are partnered with the right insurance advisor and insurance carrier can make a world of a difference during the policy year and more importantly at claims time. By performing the necessary due diligence upfront, you can be sure your clients have the appropriate and applicable insurance coverage in place from an advisor that knows how to place them. Your clients will thank you for the recommendation because of this experience and brag about you to their friends. After all…is this not how they found you in the first place?
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NOTE: This blog is part of a series of blogs dedicated to wealthy families and their advisors to provide tips and strategies for protecting wealth and assets through the use of properly structured insurance policies. Take a look at Part 1 of this series and check back often for timely updates.