The following is a Guest Post by Eric Kossian of Leavenworth Insurance
When an affluent person buys homeowner's insurance their lifestyle demands that they have home insurance that matches their lifestyle.
For starters, an affluent client has a larger more expensive home ($400K market value+) that should be insured with no cap on replacement cost instead of limited "extended replacement" on 95% of policies offered. They also need Comprehensive Perils coverage (everything that goes wrong that is not excluded is covered) instead of a list of Special or Broad Perils (only listed perils are covered).
An affluent client typically has fine art, jewelry, musical instruments or collectibles that they will have scheduled coverage for any direct physical loss to the item. Affluent clients typically have higher quantities of items that under typical policies limit coverage for theft of these items:
- Firearms $2500 limit,
- Jewelry, Precious Stones,Watches and Furs $1500,
- Memorabilia $5000,
- Securities $1500,
- Silverware $2500,
- Personal Tools $5000
These theft limits are just way too low for most affluent clients since they often own 2 -10 times the theft limits of these items.
Home policies designed for affluent policyholders also typically cover ID Fraud Reimbursement of $25000 or more, Ordinance and law coverage ( to bring home up to current code after a loss) and include Personal Injury Liability.
Speaking of liability, affluent clients are also more likely to be sued because they are more in the public eye, more likely to own rental properties and more likely to have hired household help such as nannies, gardeners, cooks and housekeepers. They need much higher auto, boat and home liability via excess liability coverage of $1 - 10 million or more. Excess liability also covers the family for at fault skiing, snowboarding, boat, recreational vehicle and hunting accidents (think Dick Cheney!) as well as libel, slander, false arrest and defamation of character. An excess liability policy will also cover defense costs, lost wages, interest on unpaid judgments, and even premiums on appeal bonds. A good excess policy will include excess underinsured motorist coverage of a million as well.
Due to international travel a good policy will extend not just liability coverage but also auto physical damage coverage worldwide, so when renting a Mercedes on the Autobahn, the insured would be able to waive the expensive rental car coverage. The policy would also cover any loss of use or diminished value of the damaged rental car.
There are only a handful of carriers that cater to affluent clients with the broader coverage they provide. Believe it or not it might be only a few hundred more dollars a year, and is often a few hundred dollars less, due to large discounts provided by their high credit scores - the single biggest statistical determinate of loss.
Eric Kossian, is an Underwriting Specialist and Agency Principal for Leavenworth Insurance and InsurePro with affluent clients throughout Washington. He can be reached at [email protected] by calling 1-877-548-5488.