Wealth Exposed Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding The Wiley Finance series contains books written specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors Book topics range from portfolio management to e-commerce, risk management, financial engineering, valuation and financial instrument analysis, as well as much more For a list of available titles, visit our website at www.WileyFinance.com Wealth Exposed Insurance Planning for High Net Worth Individuals and Their Advisors Brian G Flood, cpcu, arm Cover design: Wiley Cover image: top and bottom © iStockphoto.com/pictograph; red leather © iStockphoto.com/claylib Copyright © 2014 by Brian G Flood All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002 Wiley publishes in a variety of print and electronic formats and by print-ondemand Some material included with standard print versions of this book may not be included in e-books or in print-on-demand If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com For more information about Wiley products, visit www.wiley.com ISBN 978-1-118-81069-9 (Hardcover); ISBN 978-1-118-81080-4 (ebk); ISBN 978-1-118-81070-5 (ebk) For my wife, Regina, whose love and support provides the foundation as our dreams are pursued My children, Francesca, Andrew, and Peter John (PJ), who remind me each day of the joy of being a dad Dream big and great things will happen! My late father, Gerard, who taught me the insurance business and the importance of integrity My mother, always excited to hear my dreams and ambitions, no matter how outrageous, encouraging all the way to always reach for the stars Terry, my brother and business partner A great pilot, captain, and navigator in business, in the air, and on the seas Contents Introduction The Challenges of Wealth and the Next Level Why Wealth Exposed Needed to Be Written How to Use This Book CHAPTER Welcome! You Are at the Next Level A Real-World Success Story What Risks Are You Facing? CHAPTER My-Oh-My, How Far You Have Come! Remember Your First Apartment? CHAPTER Life Is Too Short to Drink Cheap Wine A Look at Managing Valuables and Collectibles Schedules Now to the Wine Cellar for a Vertical Tasting of Lafite Then There’s the Antiques, Rugs, China, and Other Treasures CHAPTER The Hired Help—Who’s Watching Whom? The Real Risk of “Nanny Revenge” What Can Go Wrong? Everything Managing the Risks of Household Staff Four Things All Domestic Employers Need to Know about Employee Law Workers Compensation, Employee Benefits, and the Employment Practices Issues Domestic Staff Present CHAPTER Which Car Will I Drive Today, the Ferrari or the Bentley? It’s Not Your Oldsmobile’s Insurance Coverage Insuring for the Underinsured and Uninsured High-End Cars Need High-End Insurance Coverage xi xii xiii xiv 1 9 23 24 34 36 39 39 40 41 42 44 49 49 52 55 vii CONTENTS viii CHAPTER How Big Is Your Umbrella? Standard Umbrella Policies versus Specialized Umbrella Policies How Much Is Enough? Filling the Gaps Not-for-Profit Board Members—Are You at Risk? Summary CHAPTER Toys, Toys, and More Toys Case-in-Point Managing Your Risks at Sea and in the Air You’d Better Sweat the Small Stuff CHAPTER Personal and Family Security Risks Whom Are We Really Dealing with Here? We’re All an Open Book Understanding the Threats The World Is Your Liability Preemptive Security Planning CHAPTER The Dangers of Wealth High Profile Equals High Risk What Exactly Is Defamation? Professional Liability The Higher the Profile, the Bigger the Lawsuits The Wealthy Need to Prepare for the Worst You Are Your Brand, So You’d Better Protect It Protecting Your Intellectual Capital CHAPTER 10 Personal Risk Management Planning at the Next Level It’s All Downhill from Here The Personal Risk Management Process Generic Solutions Just Don’t Cut It at the Next Level 57 58 59 60 61 62 63 64 65 68 74 77 78 78 82 84 86 89 89 90 91 92 93 94 95 97 97 99 101 Contents CHAPTER 11 Would You See an MD Generalist for a Heart Transplant? It Takes Three to Tango What Your Property-Casualty Agent Doesn’t Know Can Hurt You It’s Not Just about Insurance Advantages of Consolidating Your Personal Risk Program Service Fit for Kings and Queens It Takes a Village CHAPTER 12 Getting Started with Next-Level Planning It’s Not Going to Get Any Easier How Do You Eat an Elephant? Go Ahead and Rip Off that Band-Aid! CHAPTER 13 Making the Move Abroad It’s All in the Planning What Every Expatriate Should Know About International Insurance Coverage International Property Coverage Valuable Articles versus Regular Property Scheduling Your Valuables Storing Your Property Transit Insurance International Personal Umbrella Liability Coverage Key Takeaway—Don’t Leave Home without It CHAPTER 14 Weaving It all Together Francesca’s Fabulous Life—A Case Study Francesca’s Directorship Final Strategies for Francesca and John Summary Conclusion It’s Easier than You Think ix 103 103 105 107 109 111 112 115 116 117 118 121 122 122 125 126 126 127 127 127 129 131 131 139 140 141 143 144 CONTENTS x Appendix A Sample Personal Lines Checklist 145 Appendix B Coverage and Service Comparison 149 Appendix C Specialized Flood Insurance versus Standard Flood Insurance 155 Appendix D Ten Items to Include in Family Disaster Plan 157 Appendix E Breakdown of Audio and Video Recording Laws 159 Notes 161 Insurance Glossary 163 Useful Websites for Personal Risk Management and Insurance Information 173 About the Author 175 Index 177 Wealth Exposed: Insurance Planning for High Net Worth Individuals and Their Advisors Brian G Flood © 2014 Brian G Flood Published 2014 by John Wiley & Sons, Inc Introduction May you live in interesting times —Ancient proverb hese are, indeed, interesting times for people of wealth, but perhaps not in the way you would like to think I had always thought this ancient proverb to be a blessing that wishes the gift of wisdom for someone However, it was recently explained to me that it is actually a curse—a less-noble wish for an experience of upheaval and anxiety While I wouldn’t necessarily wish that upon anybody, the adage turns out to be appropriately prophetic for what has transpired over the last several years in the lives of people who have attained higher levels of wealth As anyone would have expected, the extraordinary convergence of a housing and stock market crash, a credit crisis, a recession, and years of irresponsible fiscal management of our government has taken a severe toll on the American psyche As if suffering significant losses of net worth during the extended crisis wasn’t enough, the wealthy have become groundzero in the politically inspired tumult that spawned the “Occupy Wall Street” movement and ignited a heated election-year debate over their “fair share.” In this new theater of class war, people who would otherwise desire to live quiet, productive, and often charitable lives now find themselves targeted by government redistributionists and resented by the “99 Percent.” But, if recent trends are any indication, the wealthy may have bigger worries than mere taxes and scorn As the growing income disparity continues to widen the divide between the so-called “haves” and “have-nots,” the wealthy now face a much higher risk of becoming the target of “citizen redistributionists”—those seeking their “fair share” through an accommodating justice system T xi Insurance Glossary 169 whereas accident refers to instantaneous damage, identifiable as to time and place In other words, occurrence may be defined as an event, or repeated exposure to conditions, that unexpectedly causes injury during the policy period open perils: See: all risk peril: Refers to the causes of possible loss, such as fire, windstorm, explosion, etc personal articles floater: Personal inland marine insurance that provides all risk coverage on nine optional classes of personal property: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections, and coin collections power of attorney: The written instrument by which the authority of one person to act in the place and stead of another as his or her attorney in fact is set forth primary insurance: When two or more coverages or policies apply to the same loss, the one that pays first, up to its limits of liability or the amount of the loss, whichever is less See: excess insurance proof of loss: A statement signed by the policyholder making formal claim against the company for damage to or loss of the property insured pro-rata: A method of handling insurance when more than one policy applies to a loss Each policy covers a portion of the loss in proportion to the relationship its limit of liability bears to the total limit of liability under all applicable policies punitive damages: Damages awarded to punish the wrongdoer for antisocial actions, rather than simply reimbursing the plaintiff for the loss Punitive damages are awarded when the injury is intended, or involves a wrong more flagrant than negligence “reasonable person”: A pattern of behavior used as a basis for defining negligent conduct One is required to act as though he or she has the physical attributes of the person actually involved in the case, as well as to exercise a certain degree of mental capacity—that of the average person of similar age and experience Persons holding themselves out as having superior skills, knowledge, or intelligence also have a special standard of conduct imposed on them, which is higher than the one imposed on the average person rental value: An indirect property coverage available under dwelling and homeowners policies and also available with certain commercial contracts that reimburses the insured for rents lost when rented property is damaged by a peril insured against replacement cost endorsement: An endorsement that can provide replacement cost coverage for personal property when added to the Homeowners Special Form (HO-3) 170 INSURANCE GLOSSARY salvage: The property in which an insurance company secures an ownership interest as a result of paying a claim for total loss or damage based on the true value of the property in its undamaged state or before the loss occurred special damages: Damages that compensate for direct and specific expenses that are involved in a loss, including property damage, medical bills, loss of use, rental expenses, and lost wages Special damages not include compensation for inconvenience or pain and suffering strict liability: Refers to the direct responsibility for damages resulting from a deliberate action that is potentially hazardous total loss: Loss to the insured of the entire value of goods or other property by destruction, damage, or deprivation Also, loss entailing the payment of the face amount of an insurance contract Also, property damages to the extent that the cost of repairs exceeds the market value less the salvage value umbrella liability policy: Provides broad coverage for an insured’s liability over and above liability covered by underlying contracts or retention limits Can be personal or commercial underinsured motorist coverage: A coverage that reimburses the insured for the difference between the actual damages sustained by the insured for bodily injury and the amount of liability insurance that meets the state’s minimum financial requirements carried by the driver who was at fault, up to the limits of the insured’s underinsured motorist coverage underwriting: The insurance function that researches and evaluates insurance applications to decide which are acceptable to the company as insureds uninsured motorist coverage: Automobile coverage designed to provide protection for the insured should he or she be included in an accident in which the driver at fault has no insurance to cover the loss vicarious liability: Negligence that is not directly attributable to the person claimed against, but that is the negligence of another for whom the person claimed against is in some way responsible Also known as imputed liability waiver: The relinquishment of a right, either expressly or by implication Express waiver is made voluntarily In insurance matters, the policy may be reformed by endorsement or otherwise amended Implied waiver may result from misleading actions or neglect on the part of the claim representative A claim representative is not privileged in this area and must avoid all acts of waiver except those that the insurer has instructed the claim representative to perform Insurance Glossary 171 workers Compensation insurance: Insurance that covers an employer’s obligations under Workers Compensation laws, and that makes the employer responsible for stated damages in the event of a work-related injury or illness Workers Compensation coverage also includes separate coverage for employers liability wrongful death: Action on account of injuries that result in death before a claim for them was compromised or reduced to judgment The death is judged to be needless, unjust, reckless, and unfair Wealth Exposed: Insurance Planning for High Net Worth Individuals and Their Advisors Brian G Flood © 2014 Brian G Flood Published 2014 by John Wiley & Sons, Inc Useful Websites for Personal Risk Management and Insurance Information WWW.IRMI.COM—International Risk Management Institute WWW.III.ORG—Insurance Information Institute WWW.FEMA.GOV—Federal Emergency Management Agency WWW.ACEGROUP.COM—ACE Private Risk Services WWW.AIGPRIVATECLIENT.COM—AIG Private Client Group WWW.CHUBB.COM—Chubb Personal Insurance WWW.FFIC.COM—Fireman’s Fund Insurance Company 173 Wealth Exposed: Insurance Planning for High Net Worth Individuals and Their Advisors Brian G Flood © 2014 Brian G Flood Published 2014 by John Wiley & Sons, Inc About the Author rian Flood, CPCU®, ARM™, has spent more than 20 years in commercial risk management and risk transfer, working with midsized organizations, family offices, successful entrepreneurs, executives, athletes, and other highprofile individuals to implement risk reduction strategies Utilizing a highly personalized approach to personal risk management, Brian is highly regarded for developing creative risk management solutions and concepts unique to each individual or organization As vice president of the Flood Group, based in New York, Brian leads a team of both personal and commercial lines specialists to provide a complete suite of risk management services and products to a clientele that spans the country A major thrust of the Flood Group’s outreach to their clients is education because they have found that effective personal risk management begins with knowledge To that end, Brian, an avid writer himself, decided to write the book he has long been looking for but could never find as recommended reading for his clients—one that presents personal risk management concepts with clarity and appeal for busy high-net-worth individuals and their advisors When he’s not working with clients to protect their lifestyles and businesses, Brian enjoys spending time with his true passion—his wife, Regina, and three children, Francesca, Andrew, and Peter John (PJ) A sports enthusiast, he splits his free time between coaching his kids’ sports teams, golfing, and skiing Brian is also actively involved with Rotary Club and Knights of Columbus Brian earned a BBA in management from Hofstra University and has earned industry designations as a Chartered Property Casualty Underwriter (CPCU) and Associate Risk Management (ARM) He holds licenses for Property & Casualty and Life, Accident & Disability B 175 Wealth Exposed: Insurance Planning for High Net Worth Individuals and Their Advisors Brian G Flood © 2014 Brian G Flood Published 2014 by John Wiley & Sons, Inc Index A Abandonment clause, 163 Accident, 57, 61, 163 ACE Private Risk Services, 107, 109, 173 ACE Private Risk Services Survey, 92–93, 110 Actual cash value (ACV), 50, 163 ACV See Actual cash value (ACV) Additional living expense, 163 Advisory team, risk management planning and, 112–114, 140 Aftermarket part, 163 Agent, 163 Aggregate limit, 163 Agreed value coverage, 66, 163 Agreed value policies, 50–51 AIG Private Client Group, 107, 109, 173 Aircrafts insurance: ownership of, 72–73 pilots and, 73 specialized vs typical insurance providers, 153 Air travel: managing the risk of, 117–118 wealthy people and, 68–74 Aleatory, 163 Allred, Gloria, 39–40 All risk insurance, 163–164 All-terrain vehicles coverage See ATV coverage Americans with Disabilities Act, 43 Antiques, 36–37 Appraisers, expert, 32–33, 37 high-end jewelry and, 31 high net worth people and, 24 high-value artwork and, 26 valuable articles and, 32–33, 37 Art collection at home, questions about, 30 Art collectors: challenge of, 25–26 ensuring protection of artwork, 29 mistake of, 27–28 steps to protect artwork, 26–27 Artwork: assessing exposure of, 30 at galleries and museums, 29 insuring the title of, 27–28 risk of damage of, 25 schedule, importance of managing, 25–27 storage facility, 31 uniqueness of, 26 Assumption of risk, 164 Attorney, role in risk management planning, 113 Attractive nuisance, 164 ATV coverage, 75 Audio recording laws, 159–160 Auto insurance: checklist, 147–148 concierge service, 56 of high-end cars, 55–56 177 178 Auto insurance (continued) international coverage, 129 non-owned, 73 for the other car, 51 for other drivers, 55 specialized vs typical insurance providers, 151 for teenage drivers, 54–55 for underinsured and uninsured, 52–54 value policies, 50–51 Aviation insurance, 68 for aircraft flight crew, 73 aircraft ownership and, 72–73 deductibles in, 70 exclusions in, 70–72 hull coverage in, 69–70 medical coverage in, 70 non-owned auto insurance and, 73 third-party liability coverage and liability limits, 68–69 working with aviation insurance specialist, 73–74 Aviation insurance specialist, aviation insurance and, 73–74 B Background checks, 43, 44 Bank vault, premiums and storing in, 33–34 Betterment, 164 Binder, 164 Blanket coverage, for valuables, 33 Blanket insurance, 21, 36, 164 Bodily injury, 71, 164 Book value, 50 Brand, 94–95 Broker, 164 Brown, Jerry, 39 INDEX Builders Risk policy, 15 Business planning specialist, role in risk management planning, 113 By-laws of the association, 17 C Car rental gap, 60–61 Case study (personal risk management planning), 131–141 Casualty insurance, 164 Certified public accountant (CPA), role in risk management planning, 113 China, managing the risk of, 36–37 Chubb Personal Insurance, 107, 109, 173 Cigars, insurance of, 23 City apartment, 16–17 Civil liability, 164 Claimant, 164 Claims: against high net worth individuals, 40–41 by nonprofit organization, 61 by personal employees, 17 COC See Course of Construction (COC) Coinsurance clause, 164 Collectibles schedules, managing, 24–34 Collision, 164 Combined Single Limit (CSL), 69 Commercial lines, 164 Commercial policy vs personal policy, 125 Common law, 165 Company car gap, 61 Compensatory damages, 165 Comprehensive coverage, 165 Index Concealment, 165 Consideration, 165 Contingent liability, 165 Contractors vs employee, 45–46 Contracts, loopholes in, 23 Coop/condo policies, 17 Cost, of coop/condo insurance, 17 Cottage, insurance coverage of, 16 Course of Construction (COC), 15 Covenants, Conditions & Restrictions (CC&R’s), 17 Crew coverage, yacht insurance and, 65–66 Crimes against the wealthy See also High net worth individuals extortion threat, 83–84 kidnapping threat, 82–83 CSL See Combined Single Limit (CSL) Cybercriminals, 79–80, 86 Cyber-security, 87 D Death, wrongful, 171 Death on the High Seas Act, 65 Debris removal, 165 Declarations, 165 Deductible(s): aviation insurance coverage and, 70 defined, 165 on yacht policy, 67 Defamation, 90–91 Defensive patent insurance coverage, 96 Degree of care, 165 Depreciation: defined, 165 in partial losses, yacht policy and, 67–68 Direct loss, 165 179 Directors & Officers (D&O) insurance, 61–62 Disaster plan See Family disaster plan Doctrine of joint and several liability, 90–91 Domestic employers: employee law and, 42–43 lawsuits and, 46–47 Workers Compensation laws and, 46 Domestic staff disputes, 39–41 Domestic workers, hiring, 45–46 Driving internationally, 84–85 Driving while intoxicated (DWI), 55 Due care, 165 Dwelling policy, 165 E Education, as countermeasure, 87–88 Employee benefits, 44–45 Employee(s): 1099, hiring, 45–46 laws, domestic employers and, 42–43 vs contractor, 45–46 Employers, domestic See Domestic employers Employers Liability Coverage, 60 Employment, multi-state, 43 Employment Practices Liability Insurance (EPLI), 18, 46–47, 61 Endorsement, 165 EPLI See Employment Practices Liability Insurance (EPLI) Equal Pay Act, 43 Equipment breakdown insurance, 14–15 Errors and omissions, 166 180 Excess insurance, 166 Exclusions: defined, 166 in yacht policy, 67 Expatriates, international insurance coverage and, 122–125 Extortion threat, 83–84 F Face value, 166 Fair Credit Reporting Act, 43 Fair Labor Standards Act, 43 Family disaster plan, items in, 157 Family security abroad, 85 Federal Emergency Management Agency, 173 Federal Insurance Contributions ct (FICA), 45 Federal Longshore and Harbor Workers Compensation Act, 65 FICA See Federal Insurance Contributions Act (FICA) Financial advisor, role in risk management planning, 113 Financial planning, Financial responsibility laws, 166 Fireman’s Fund Insurance Company, 107, 109, 173 Fixed-based operators (FBO), 73 Floater, 166 Flood insurance: defined, 166 need for, 12–13 specialized vs standard, 155 Franklin, Ben, 63 G General damages, 166 Generic solutions, managing risks by, 101–102 Global travel intelligence, 87 INDEX Gross negligence, 166 Guaranteed replacement cost provision, 14 Guesthouse, insurance coverage of, 16 H Hazard, 166 Health insurance, international, 129 High-end car owners, service and, 56 High-end properties, risk management needs of, 11–12 High net worth individuals See also High net worth individuals toys; Life at the next level claims against, 40–41 offerings of insurance companies and brokers to, 107 personal liability coverage and, 59–61 personal risk management plan and, 116 preparing for the worst, 93–94 risk management planning and, 112–114 teenage drivers and, 54–55 threats facing, 77–78 trust issue and, 80 High net worth individuals toys See also Aircrafts insurance; Yacht insurance ATV, 75 Jet-skis (personal watercraft), 76 motor home, 76 snowmobile, 75 High-performance cars, insurance of, 51 High-value art collectors, artwork protection and, 26–27 Index Hiring: contractor vs employee, 45–46 domestic workers, 41–42 mismanaged, 42–43 Homeowners insurance: equipment breakdown coverage, 14 form checklist, 145 insurance fallacy, 75 policy, 11, 14, 166 specialized vs typical insurance providers, 149–150 valuables coverage, 126 Workers Compensation and, 46 Homes: renting, living abroad and, 123–124 unoccupied, insurance and, 125 Home security systems, 86–87 Household staff, managing the risk of, 3–4, 41–42 Hull insurance, 69–70, 166 I Identity theft, 81 Identity theft protection, 87 Implied warranties, 166 Incurred losses, 166 Indemnification, 167 In-flight (IF) losses, 70 Information hackers, 78–79 Inland marine insurance, 167 In-law apartment, insurance coverage of, 16 In-motion (IM) losses, 70 Insurable interest, 167 Insurance, 6–8, 23 See also Artwork; Auto insurance; Claims; Flood insurance; 181 Homeowners insurance; Valuables; Yacht insurance coop/condo, cost of, 17 Hull insurance, 166 inland marine, 167 of in-law apartment, 16 intellectual property, 96 kidnap and ransom, 83, 84 malpractice, 168 no-fault, 168 policy on demand, 20–21 primary, 169 transit, 127 websites about, 173 Insurance brokers, 107–108 Insurance.com knowledge survey, 51 Insurance Information Institute, 157, 173 Insurance representative, choosing, 106 Insurance Risk Management Institute, on family disaster plan, 157 Insuring agreement, 167 Intellectual capital, protecting, 95–96 Intellectual property insurance, 96 International insurance coverage, expatriates and, 122–125 International property coverage, 125–126 International Risk Management Institute, 173 International travel: driving internationally, 84–85 kidnapping and, 83 medical coverage, 85 personal and family security abroad, 85 Inventory, 32 182 J Jet-skis (personal watercraft-pwc), 76 Jewelry collectors, 29–31, 32 Jones Act, 65 K Keylogging See Keystroke logging Keystroke logging, 81 Kidnap and ransom insurance (K&R), 83, 84 Kidnapping threat, 82–83 L Laws: audio and video recording, 159–160 employee, 42–43 financial responsibility laws, 166 states, 43–44 Lawsuits, 64, 68, 92–93 Lessons learned, risk management plan and, 4–5 LHWCA See Longshore and Harbor Workers Compensation Act (LHWCA) coverage Liability(ies): coverage of yacht, 65 gaps, 60–61 limits, 68–69, 167 professional, 91 of special event, 18–19 third-part coverage, aviation insurance and, 68–69 of vacation home, 20–21 vicarious, 91, 170 Liability protection, in yacht insurance policy, 66 Life, Health, Disability checklist, 148 INDEX Life at the next level, 1–3 See also high net worth individuals; High net worth individuals toys air travel and, 68–74 city apartment, 16–17 collecting valuables, 24 hosting annual gala, 18–19 in-law apartment, 16 need for flood insurance, 12–15 need for housekeeper, 17–18 personal employees and risk exposure, 18, 89–90, 105 planning for, 115–116 primary home exposures and, 11–12 residences held in trust, 19–20 vacation home(s), 20–21 Lifestyle, changes in, 9–11 Limited liability companies (LLCs), 72 Limits of liability, 68–69, 167 Living abroad, personal risk management and, 122–125 LLCs See Limited liability companies (LLCs) Longshore and Harbor Workers Compensation Act (LHWCA) coverage, in yacht insurance policy, 66 Loss(es): defined, 167 direct, 165 partial, depreciation in, 67 proof of, 169 total, 69, 170 Loss exposure, identifying and analyzing, 99–100, 118 Loss of consortium, 167 Loss-of-use coverage, 167 Loss prevention, 33 Index M Malpractice insurance, 168 Marine insurance specialist, yacht policy and, 68 Market value, defined, 168 Market value coverage, 33 Material misrepresentation, 168 Medical coverage: aviation insurance and, 70 traveling internationally and, 85 in world traveling, 85 Medical payments, in yacht insurance policy, 66 Mitigation of damages, 168 Morale hazard, 168 Moral hazard, 168 Motor Home (RV) coverage, 76 N Named non-owner coverage, 168 Named peril policy, 168 Nanny-cams, 43–44 Nanny revenge, 39–40 Negligence, 168 No-fault insurance, 168 Non-owned auto insurance, 73 Nonprofit Directors & Officers Insurance (D&O), 62, 140 Nonprofit organizations, claims by, 61 O Occurrence, 168–169 Offensive patent insurance coverage, 96 Oil Pollution Act of 1990 (OPA) coverage, 66 One-part consent, audio recording and, 160 183 OPA See Oil Pollution Act of 1990 (OPA) coverage Open perils, 163–164 P Peril, 169 Personal articles floater, 169 Personal excess liability, specialized vs typical insurance providers, 151–152 Personal injury vs personal liability, 124 Personal insurance exposures, Personal liability coverage, 58, 59–60 Personal liability options checklist, 147 Personal lines exposure checklist, 145–148 Personal risk management See also Risk(s) defined, 99 insurance brokers and, 107–108 living abroad and, 122–125 process, 99–101, 117 websites for, 173 Personal risk management planning (case study), 131–141 Personal risk program consolidation, benefits of, 109–111 Personal risks, 3, 105 Personal security abroad, 85 Personal umbrella liability coverage, 57–61 Personal umbrella policies, 61 Personal watercraft (PWC) insurance, 76 Phishing, 80, 81–82 Pilot and use, aircraft coverage and, 71 184 Planning See also Security planning financial, insurance, errors of, 7–8 to live abroad, 122 next-level, 115–116 passion about, Policy See also Umbrella policy aviation, 68 blanket, 21 Builders Risk, 15 equipment breakdown, 14 flood insurance, 12–13 for high-performance cars, 51 homeowners, 10, 11 named peril policy, 168 name insured on, 19, 20 personal vs commercial, 125 renters, 16, 123–124 yacht, 65, 67 Power of attorney, 169 Price Shoppers, 6–7 Pricing of insurance, Primary insurance, 169 Private collections, specialized vs typical insurance providers, 152–153 Professional liability, 91 Proof of loss, 169 Property, storing, 127 Property and casualty coverage, 58 Property-casualty agent, 105–206 Property checklist, 146–147 Pro-rata, 169 Public records, 79–80 Punitive damages, 169 PWC insurance See Personal watercraft (PWC) insurance Q QPRT See Qualified Personal Residence Trust (QPERT) INDEX Qualified Personal Residence Trust (QPERT), 19 R “Reasonable person,” 169 Remodeling risks, 15 Renovation risks, 15 Rental value, 169 Renters policy, 16, 123–124 Renting your home, living abroad and, 123–124 Replacement cost endorsement, 169 Replacement cost loss settlement, in yacht insurance policy, 66 Riches-to-rags story, Risk management, 65 See also Personal risk management; Risk management techniques assessment of, 19 services, range of, 107 team, 24, 112–114 for wine collectors, 35–36 Risk management plan methods, risk avoidance in, 100 Risk management planning, business planning specialist role in, 113 Risk management program, monitoring and measuring, 101 Risk management specialist, role in risk management planning, 114 Risk management techniques: identifying and selecting, 100, 118 implementation of, 101 Risk managers, Risk mitigation specialist, art collectors and, 27 Risk(s) See also Risk management Index exposure, home-hosted wedding and, 18 exposure, personal employees of wealthy families and, 18 facing individuals, 5–8 of household staff, managing, 41–42 management for pleasure craft, 65 of nanny revenge, 39–40 personal, 3, 105 reduction, 100 remodeling or renovation, 15 retention, 101 transfer, 101 Rugs, 36–37 S Salvage, 170 Sandy (Superstorm), 12, 49, 111 Scattered insurance program, Security leaks, plugging, 87 Security planning: education as countermeasure, 87–88 home security systems, 86–87 plugging the security leaks, 87 preemptive, 86 Sexual harassment lawsuits, 46–47 Smooth limit liability, 69 Snowmobile coverage, 75 Special damages, 170 Special event liabilities, 18–19 Specialized collection management software programs, 26 Specialized flood insurance vs standard flood insurance, 155 Specialized insurance broker, role in risk management planning, 113 Specialized vs typical insurance providers: 185 auto and, 151 homeowners and, 149–150 personal excess liability, 151–152 and private collections and, 152–153 specialized products and, 153 watercraft/yacht and, 153 Specialized products, specialized vs typical insurance providers, 153 Specialized umbrella policy, standard vs., 58 Speedboat rental gap, 60 Standalone policy, 36 Standard umbrella policy, 58, 60 Stated value policies, 50 State laws, 43–44 Story, real world success, 1–3 Strict liability, 170 Success story, real -world, 1–3 Systematic background investigations, 87 T Teenagers drivers, auto insurance and, 54–55 Territorial limitations, in aircraft coverage, 71 Threat(s): extortion, 83–84 facing the wealthy, 77–78 kidnapping, 82–83 Total loss, 170 Transit insurance, 127 Travel See International travel Treasures, 36–37 Trust, 80, 103–105 Two-party consent, audio recording and, 160 186 INDEX U Umbrella liability insurance, 127–128, 138–139 Umbrella policy, 18, 20 aircraft liability coverage, 69 liability, 170 standard vs specialized, 58 yacht owners and, 65 Underinsured motorist, insuring for, 52–54 Underinsured motorist coverage, 170 Underwriting, 170 Uninsured boater coverage, in yacht insurance policy, 66 Uninsured motorist, insuring for, 52–54 Uninsured motorist coverage, 170 Watercraft See Jet-skis (personal watercraft-pwc) Wear and tear, aircraft coverage and, 71 Websites, for personal risk management and insurance, 173 Whaling, 80 Whitman, Meg, 39–40 Wine cellar, valuing, 35 Workers, domestic, 41–42 Workers compensation, homeowners insurance and, 46 Workers Compensation gap, 60 Workers Compensation insurance, 171 Wrongful death, 171 V Vacation home, 20–21 Valuables: insurance coverage, 24, 33, 126 managing schedules, 24–34, 126 Vicarious liability, 91, 170 Video recording laws, 159 Vintage jewelry pieces, 31 Y Yacht insurance, 76 coverage, 65, 66–67 crew coverage in, 65 depreciation in partial losses, 67 navigation exclusions and restrictions in, 66, 67 policy coverage in, 66–67 specialized vs typical insurance providers, 153 working with marine insurance specialist, 67 W Waiver, 170 War exclusions, aircraft coverage and, 72 ... lifestyle, activities, and possessions is the surest way to see you are not leaving your wealth exposed Wealth Exposed: Insurance Planning for High Net Worth Individuals and Their Advisors Brian G... protect their privacy Please be sure to visit www .wealth- exposed. com to find additional Personal Risk Management resources Wealth Exposed Wealth Exposed: Insurance Planning for High Net Worth Individuals. .. valuation and financial instrument analysis, as well as much more For a list of available titles, visit our website at www.WileyFinance.com Wealth Exposed Insurance Planning for High Net Worth Individuals