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Posts Tagged ‘private risk advisor’

A recently released white paper from Ace Private Risk Services reminds financial advisors that many investors are increasingly turning to their passion for fine art, wine and other collectibles in an effort to rebalance their investment portfolios. Sound risky? Well, it is not uncommon that well managed collections outperform more conventional investments.

This strategy is not without risks, as many collectors and their financial advisors often do not take the extra steps to intelligently manage the hidden risks that can threaten the value of their collections. To learn more about the “Eleven Steps for Protecting Passionate Investments”,  click here to access the white paper on Ace’s website.

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I cringe each time I see major insurance carriers advertising their coverage using “save ___% in __ minutes” or “name your own price” deceptive sales pitches. Most sophisticated consumers understand that in order to significantly lower insurance costs, certain sacrifices in protection (known or unknown) lurk somewhere in the fine print.

Meanwhile —- there IS a way to purchase high limit personal excess liability (often referred to as “umbrella” coverage) at costs between 30 and 50% below the prevailing market costs. Often, coverage enhancements can be included that even expand the protection normally available with such policies. More coverage at a lower cost —– but how?

As always, there is a “catch”: more protection for less money can be arranged only when carriers are presented with a large enough group of applicants who comprise an eligible “Group”. “Group Personal Excess Liability” (GPEL) is a concept that has been around for decades, and is regarded as a valuable voluntary benefit at many large corporations.

The leading underwriters for this product are Chubb, CNA, Chartis, Fireman’s Fund and Ace. The differences in eligibility, costs, and coverage features offered by each carrier are subtle, yet important. Generally, the program is most successful in a workplace with a group of 10 or more participants seeking liability limits of $5 million or more. For larger groups, the coverage enhancements, ease of enrollment and cost discounts can become very meaningful. I’d be happy to have a conversation to help you examine whether this program can benefit you and others you know, or clients you advise.

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missing-piece1…there is an insurance solution, if you know where to look (and who to ask). Meanwhile, I’m often surprised to meet prospective clients who have been told by other insurance brokers “there’s no coverage available”.  In the vast insurance marketplace, that is rarely the case!

With a great deal of turmoil in the financial marketplace, we’ve been asked to secure insurance coverage for a wide range of risks labeled “uninsurable” by other brokers. While the choices may be few, we can likely secure or direct you on how to secure insurance protection for even the most unusual risks.

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As high net worth individuals embrace the tax and asset protection benefits of placing private property ownership in the name of a trust or LLC, critical insurance coverage issues arise. Few trusted advisors or property owners are aware that the “named insured” insurance contract provisions prohibit the extension of coverage to protect the interests of the real property owner – the trust or LLC – in the event of a covered loss.

The resulting coverage void can remain undetected for years, only becoming apparent after a loss for which the application of coverage has been invalidated. Depending upon their role in the creation and administration of the trust or LLC, some advisors may even discover they have a professional liability exposure in the event of an uncovered loss. 
                                                                                                                                                           Click here to access an article from The CPA Journal that explains this problem and the solutions that can be made available.  

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To Hedge, or not to Hedge….

 

An interesting question was recently presented on Terri Cullen’s great WSJ blog for her Fiscally Fit column by someone who labeled themselves a “contrarian”. In essence, the post asked: “since the likelihood of losing a home to fire is remote, why bother insuring the home for the full cost to rebuild?”

 

I don’t think this question is contrarian at all, I think it is fair and logical. Savvy consumers know to beware of insurance “scare mongers”, who would have us believe that the sky is about to fall on all of our homes. Meanwhile, statistics reveal that the risk of a fire totally destroying any single home is remote.  Click here for some good insights, or check this site:  https://www.usfa.dhs.gov/statistics/national/residential.shtm

 

For those who wish to hedge the unlikely risk of a fire consuming their home by partially insuring the cost to rebuild, the insurance industry has erected significant pitfalls. While these can be navigated, doing so requires careful guidance.

 

As both a risk advisor and an insurance consumer, I would also describe myself as a “contrarian”. Meanwhile, knowing a.) fire is but one of the losses that can wreak significant damage to my home ( Click this link for a chart showing the leading losses by cause to homes), and b.) the insurance carriers who “allow” consumers to hedge against total losses do so by inserting numerous contract provisions that greatly reduce the amount they will pay after a loss, I would never elect to hedge the slight risk of a total loss by selecting a policy that offers “partial coverage”.  Others I know consider this a risk worth accepting. Neither approach can be judged “right” or “wrong” until after a lifetime of home ownership.

 

It is always wise to examine risks from different perspectives. In this instance, there is real risk in placing coverage with insurance carriers who so graciously permit you to partially insure your home.

 

 

 

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Among the common problems I hear from others about their insurance program: “no one ever explained that to me”. The response offered by too many insurance agents: “you never asked”.  Clearly, what you don’t know can hurt you…

Trusted advisors and consumers need to either work with a risk advisor who can help them by providing the right answers to the right questions (me, for example), or know where to find the right questions to ask.

Through the internet I have met an “insurance consultant” in Maine who does a good job helping consumers (mostly business owners) better understand how to make intelligent decisions on managing the risks they face. To generate interest in his fee based consulting services, he offers some of his information for free. With the author’s permission, click this link: “126 Questions to Ask Your Insurance Agent” for your copy of that article

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