Page 48 - Investment Advisor March 2022

WEALTH & RISK

by Ana Robic

How to Help Protect Client Portfolios from

Excess Liability Claims

Accidents can go beyond insurance limits, which may mean a painful drain

on client assets.

igh net worth clients are espe-
cially at risk from an unexpect-
Hed source: personal liability
claims. In response, advisors can build
trust with their clients by helping them
understand and protect against cata-
strophic liability losses. An unexpected
event — such as a boat or car accident, a
guest injury on your property or a high-
dollar jury award — can reduce a client’s
personal wealth in one fell swoop.
UNEXPECTED EVENTS quality of life, they also carry new risks
EXCESS LIABILITY COVERAGE An insurance agent or broker specializ- that may require additional insurance.
Your clients may have basic auto or ing in HNW clients can help identify and
home insurance, but these policies’ lia- evaluate risks that your clients may not ACTIONS ADVISORS CAN TAKE
bility limits may not fully cover the recognize. Consider these two examples: Recent Chubb research conducted in
high costs of an accident or lawsuit. For • Dog bite severely injures girl — In partnership with Oliver Wyman found
example, a standard homeowners policy one Chubb claim, a client’s dog bit a young that 85% of successful individuals
may provide $100,000 to $500,000 in girl who was airlifted to a hospital and believe their financial advisors should
liability protection, but this limit can underwent surgery, resulting in the cli- act as a “quarterback” for all of their
easily fall short in some cases. When a ent’s excess liability policy paying $2 mil- financial needs, providing guidance not
client lacks appropriate levels of insur- lion for the girl’s treatment and recovery. only on investments but also on address-
ance, an unexpected event can require • Authorized driver causes a seri- ing P&C risks. Yet only 28% of advisors
the liquidation of investment assets to ous accident — In one Chubb claim, help their clients identify these risks.
cover a judgment or settlement, as well a client’s daughter loaned her car to a You can differentiate yourself and pro-
as legal costs. friend who drove recklessly and severely vide a new level of service by helping your
Fortunately, a personal excess liabil- injured a passenger. The client’s excess clients protect against portfolio losses
ity policy, also known as an umbrel- liability policy covered an additional $5 that might result from a liability claim. By
la policy, can provide additional million for the injured passenger beyond highlighting the benefits of excess liabil-
coverage that protects your client’s the limit of the primary auto policy. ity insurance, you’ll provide the holistic
wealth. Excess liability coverage will Moreover, your clients may have taken guidance clients are looking for.
kick in for a covered event when the on new risks during the COVID-19 pan- Ask your clients if they work with an
underlying limit of a home, auto, or demic that have not been evaluated for independent insurance broker or agent
other policy is exhausted. risk and insurance coverage. For instance, who specializes in P&C insurance. Also,
But not all excess liability policies are because of limitations on travel and the we strongly recommend you partner
the same. Make sure your client works need for social distancing during the with an agent or broker and bring them
with a carrier that offers high enough pandemic, many successful families have into conversations with your clients.
limits to protect their wealth. Also, cli- purchased new lifestyle assets — such as
ents and advisors should carefully con- a boat, motorhome, vacation property or Ana Robic is division president, North
sider how legal costs for covered events a new dog. While these purchases can America Personal Risk Services, Chubb. She Adobe Stock
will be paid under the policy. bring immeasurable value to a family’s can be reached at [email protected].

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