If you have multiple homes, automobiles and valuable articles, there’s a 90% probability that you’re overpaying on insurance premiums by up to 40%, and/or you have significant holes in your safety net. Today’s guest blogger, Tamar Silberberg-Shiffman, of Concierge Insurance Solutions, will walk you through identifying six (6) likely gaps in your insurance.
Most Property & Casualty brokers focus on the commercial side of the business – it’s where the money is. Personal portfolios become the victim of benign neglect by well-intended brokers and administrators, whose time is spread too thin and who may not be technically proficient.
You can often fix these defects without the need to change insurers by asking these questions:
- ARE YOU UNDER INSURED?
Check your Umbrella/Excess Liability limits. We’re seeing crazy verdicts, like $20m when a propane tank exploded at a bar-b-que, and $50m when a driver ran a red light and killed a motorcyclist. We are also seeing more law suits around sexual harassment, wrongful termination and age discrimination from nannies, housekeepers and gardeners.
Another area of risk is serving on a non-profit board; we find the coverage provided by most is inadequate. In all these cases, insurance companies are offering large amounts of liability coverage at attractive prices, sometimes just hundreds of dollars more for significantly more coverage. And, the wealthy are targets for liability lawsuits whether or not they carry sufficient insurance.
- ARE YOU OVER INSURED?
Check what is covered and at what levels. Many are overpaying for large amounts of Contents Coverage, often set at 40% or 50% of the value of the home (then inflated each year by 6%). Jewelry, antiques and art are likely separately insured under a Valuable Articles policy, and, therefore they should not be covered as Contents. In addition, we often see deductibles that are too low, resulting in higher-than-necessary premiums. It’s important to focus on your risk appetite, and to price out larger deductibles if applicable.
- DO YOU HAVE APPROPRIATE VALUABLE ARTICLES COVERAGE?
Check your list of separately listed valuables. Most homeowner policies have specific limitations on jewelry, antiques, fine art and other collectibles. Combining scheduled and blanket Valuable Articles coverage can avoid gaps in protection, as well as optimal pricing. Have current appraisals to ensure proper coverage and help obtain the most competitive rates.
- DOES YOUR PORTFOLIO SUPPORT YOUR ESTATE PLAN?
LLCs and Trusts must be listed as Named Insureds to cover their assets and liabilities. Make sure your vacation homes are listed on your Umbrella/Excess Liability policy; the potential uninsured liability can be staggering.
- ARE YOU PROACTIVE WITH RISK MANAGEMENT STRATEGIES?
There’s a whole checklist of things you can do to mitigate risk. However, very few risk management strategies are implemented. Low temperature detectors, automatic water shut-off devices and backup generators can save you months of inconvenience, and possible dislocation. Often, insurance companies provide credits to encourage the use of such technologies. This can result in savings of 10% or more of your premium. If you already have these devices, make sure your premium is reduced by the appropriate credits, which are often omitted.
There are also many free services available for loss prevention and mitigation, against hurricanes, wildfires, cyber-attacks, even drug and alcohol addiction. We are happy to review them with you. Which leads us to our last and most important point…
- ARE YOU GETTING COMPREHENSIVE ANNUAL REVIEWS?
Brokers become complacent and reviews become cursory, often pushed off year after year. Meanwhile, families grow and change, assets are constantly in motion and insurance markets are incessantly in flux. Without comprehensive annual reviews, you can easily become a victim to benign neglect.
The Tax Warriors® at Drucker & Scaccetti are often part of a team of advisors for clients; each having the financial peace of mind of the client as a top priority. Appropriate insurance coverage is part of the holistic view we have of a client’s personal and business finances. Contact us for a review of your insurance needs. We’d be happy to work with your insurance advisor or recommend one, like Tamar, to you, your family or your business.
As with any article that discusses tax treatment, the usual disclaimers apply: This is a generalized overview, does not represent advice, and may not apply to your situation. Do not use this article to make tax or investment decisions. Consult your tax expert or call us to be that expert.