As Wealth Advisors, we provide advice on all aspects of your financial situation, and we work with a network of carefully selected professionals in taxes, estate planning and insurance to devise appropriate solutions that will help you achieve your goals. This article is a collaboration between Merriman Advisor Chris Waclawik and Amy Deforeest, personal risk advisor at Willis Towers Watson, who is one such member of our professional network team.
Many of us set our home and auto insurance when we initially purchase it, and then we forget about it. Unfortunately, we may not realize we’ve made a mistake until it’s too late.
Here are some key warning signs that indicate it’s time to review your coverage.
1. You don’t have umbrella insurance.
Not having umbrella insurance is a major gap in protecting your assets, and is a clear sign that it’s time to review your coverage. Generally, home and auto insurance provide liability coverage with limits as high as $100,000 – $500,000. Umbrella insurance kicks in once those limits are exceeded. Coverage is inexpensive – often less than $300/year for each additional $1 million of coverage – and can be essential for protecting assets if an accident happens.
2. You own multiple properties – especially if they’re in different states.
If you own more than one property, you might benefit from reviewing your coverage with a professional. This especially is the case if the properties are in different states. Families often get insurance as needed, sometimes with different carriers, without looking at how the policies all work together. An umbrella policy may cover a property in a different state. However, if the coverage limits don’t line up, there can be a gap of hundreds of thousands of dollars.
3. You have property in trusts or LLCs.
Property may be placed in a trust or LLC for estate planning, privacy or for other reasons. When this is done, it’s important that the insurance policy accurately reflects this. Not having the trust or LLC named at all on the insurance policy is a common gap. It’s also a potential gap to have the trust named incorrectly on the policy. A professional can help navigate these issues.
4. You co-own property with other families (boats, vacation cabins, etc.).
It’s common for multiple families to own property together – for example, siblings may inherit a family vacation cabin and divide time and responsibilities. When this happens, it’s common for one family to take care of insurance for the property. This may not extend correctly to all owners, creating a gap in coverage.
5. You employ domestic staff (such as a nanny).
The most common domestic staff member is a nanny to take care of children. When families decide to hire a nanny, they should review insurance with a professional, again to ensure there are no gaps in coverage.
What does it cost to work with an insurance professional?
The initial review process shouldn’t cost anything. A good agent can help you understand what coverages you have and what changes you can make to eliminate any gaps. This coverage review doesn’t necessarily have to be a big, formal process.
How do I find a qualified professional?
With insurance, there are two types of professionals. The first are agents who work for one company. These agents always use their company’s products. The second option is to use an independent broker who can look at many different carriers. We generally prefer working with independent brokers because of the increased options when looking for coverage.
There are a few ways to find a good independent broker. One way is to look at various carriers. They often list independent brokers in the area. Someone interested in using Chubb, for example, can look at Chubb’s website for a list of brokers.
Referrals from friends and other professionals are another great source. At Merriman, we know many independent insurance brokers and we get regular feedback from our clients. Your advisor can help you find a trusted professional to work with.
At Merriman, we have historically advised primarily on investments. We’ve learned that even when clients save and invest properly, these investments can unfortunately be lost by having gaps in insurance coverage. We work hard to provide guidance to families to ensure they’re protected if something ever happens.