Liability Insurance Protection Solutions for High Net Worth Families
Special Risks:When an individual's net worth exceeds the amount of underlying insurance coverage, litigation settlements can directly jeopardize core assets, a risk that Coverage Cat recommends an "inverted pyramid" allocation to address.
- The formula for calculating the sum assured:Recommended Comprehensive Liability coverage = Liquid Assets x 2 + Fixed Assets x 0.5. e.g. a portfolio of $5 million in assets ($2 million liquid + $3 million fixed) should be allocated at least $5.5 million in liability coverage
- Trigger condition optimization:Take care to set the limits of the underlying policy (e.g., homeowners/auto) where the liability insurance is in force to ensure there are no coverage gaps. Typical configurations are: $500,000 for the underlying policy + $1-5 million for liability coverage
- Special Scene Coverage:Worldwide coverage through riders for regular policy exclusions such as domestic employment (nanny/gardener), watercraft (yachts), international travel, etc.
Execution path:The total risk exposure is accounted for through the Asset Inventory function, and then the Gap Finder tool is used to scan for existing gaps in coverage, resulting in a recommended plan with three quoted bands (basic/suitable/comprehensive), with the middle band recommended to ensure value for money.
This answer comes from the articleCoverage Cat: An Insurance Allocation Tool to Optimize Individual RisksThe
May not be reproduced without permission:AI productivity tools " How to Allocate Comprehensive Liability Insurance for High-Asset Families to Protect Assets from Mega-Lawsuits
