Why Affluent Client Lifestyles Require Better Than Normal Homeowner's Insurance

Eric Kossian, "InsurePro"
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When an affluent client buys homeowner's insurance their lifestyle demands that they have insurance that matches their lifestyle. For starters an affluent client not only 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 but also needs Comprehensive Perils coverage (everything that goes wrong that is not excluded is covered) instead of a list of Special or Broad Perils (only if on the list of perils is the peril covered).

An affluent client typically has fine arts, 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 homes 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.

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.

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January 03 - US

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Replies (3)

sunnyview
Contributions:25139

Good advice. If you have more assets, you also need to consider an umbrella policy for liability in case someone gets hurt or sees you as a target for a lawsuit.

Many times they are not very expensive and they give you a buffer between you and liability with the insurance company fighting on your side instead of against you or as a disinterested party.

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January 03

Dan, "the_country_hick"
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Limit "Personal Tools $5000."

You do not need to have an affluent lifestyle to have $10,000 or more in tools. A lot of garages have $10-15,000 in tools just for working on the owners own stuff.

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January 03

Jason DuHaime
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I couldn'd agree more, Eric. The unfortunate trend in homeowner's insurance is clients opting to trade their comprehensive policy for a more competitive price, leaving the homeowner with an uncomfortable amount of retained risk. Of course, the affluent homeowner must ensure that their custom-quality homes are insured by custom-quality policies (guaranteed replacement cost, increased water/sewer backup, all-perils comprehensive coverage, et. al).

On the other hand, many middle class homeowner's are also leaving themselves unnecessarily open to losses, especially with regard to scheduled jewelry. On a daily basis, I have this conversation with my clients, explaining that their homeowner's policy does not fully cover their engagement ring, both in absolute coverage and perils.

In short, the comprehensive policy should not be reserved for the affluent homeowner; I'm sure you agree that it should be presented to every homeowner as an option.