Industry Magazine Grand General Agency Fall 2016

Understanding High-Value Homeowners Coverage “...the deciding factor should be the value of the insurance product, not the price. “ ARE you the type of agent that is unsure how to work with high-networth prospects and clients? Is there some lingering reason that leads you to believe high-net-worth prospects are too difficult to deal with and maybe even unapproachable? If you are thinking “yes” to these two questions, there is one more question to ask: Have you asked an agent or broker with a lot of high-networth experience for a little advice? The good news is that Chubb has a comprehensive product package that is designed to fit the needs of high-networth prospects. You have a product available to you through Grand General that you should be presenting to every affluent prospect and client because many are underinsured and may be overpaying for insufficient coverage. We know that about 40 percent of high-value homes are currently underinsured, and the responsibility for this can easily be divided among the agents, the carriers, and the homeowners. While financial advisors define high-net-worth prospects as those households that have a net worth of at least $2 million, the insurance agent should consider anyone whose home exceeds the coverage limit on a standard FALL FALL 2016 2016 homeowner policy as being a high-networth prospect. Generally, people who own very expensive homes also own very expensive contents for those homes. They also typically own at least one boat, several vehicles, and their assets total significantly more than the liability limits of a typical homeowner’s policy. Now that we know who they are, it’s time to discuss what they need in terms of managing their everyday risks. The High-Value Homeowner Package The high-value homeowner package is typically written on the HO8 form, which provides coverage on an all-risk basis on the dwelling and the contents. It is not limited in coverage amounts and acts as the cornerstone of the high-value homeowner package, which includes the following: • Guaranteed replacement cost with true replication coverage on the dwelling and no limit cap • Contents coverage provided on an all-risk basis including breakage coverage • Scheduled items covered worldwide with true replication cost and up to 150 percent of scheduled value Worldwide coverage on liability, personal property, new purchases, and auto coverage that includes leased and rented vehicles • Umbrella limits up to $100 million • Kidnap/ransom coverage • Private event coverage The additional coverages found in the high-value homeowner package are what differentiate high-net-worth clients’ needs from the rest. Their list of everyday risks, although similar to other clients and prospects, is somewhat longer, and their limits need to be higher. • The Opportunity National insurers agree that the high-net-worth market is typically underserved by many agents and brokers. Many agents do not make the effort to do the research needed to fully understand the needs of affluent clients which results in those clients being underinsured. Offering more coverages and higher limits does not always equal higher premiums if the agent is educated about discounts that can result from loss prevention credits, package discounts, high credit scores, accident prevention courses, good student discounts, and 28

Industry Magazine Grand General Agency Fall 2016 | Page 28