They may not have known that they needed protection for some risk categories.
Financially successful individuals may lack entire insurance products. For example, they may not have expanded liability, which provides protection for events that exceed the limits of normal policies. Or, they may lack key coverages within the products they have. For example, they may not have specific coverage in their car insurance to protect against accidents with motorists who can’t pay for damages because they don’t have any insurance (i.e. uninsured motorist coverage) or don’t have enough insurance (i.e. underinsured motorist coverage).
Although 74% of respondents have liability insurance, many do not carry high enough limits and 10% of financially successful individuals lack expanded liability coverage entirely, which could be financially devastating if they face a lawsuit. In an increasingly litigious environment, successful families can be targeted for their wealth, and judgments are relatively common and can be severe. For example, in our study, we found that 10% of financially successful families were forced to pay judgments of $100,000 or greater, and 3% experienced judgments greater than $1 million over the last ten years.
Many successful individuals lack adequate protection for their valuables as well. In fact, 62% of those surveyed lacked jewelry insurance entirely, and were either not covering their jewelry at all or thinking they were covered under their standard homeowners insurance policy, which may only cover a portion of the value.
Of those surveyed, 87% lacked any insurance to cover their artwork. Covering art under the contents portion of a homeowners policy could leave clients heavily under-insured, as most contents coverage will utilize depreciation and not full replacement cost. In addition, the cost to replace artwork can quickly erode at the contents limit if there is a significant loss. On the other hand, separate protection for valuables is often reasonably priced, e.g. $250 for $100k of fine arts coverage annually.
The survey also revealed that only 23% of respondents had heard of employment practices liability insurance and just 6% had purchased the coverage. 24% of survey respondents carry flood insurance, which given recent catastrophes, leaves many under-protected.
Content provided in partnership with Chubb Insurance.