Protecting your trending collectibles

A new generation has embraced the joy of collecting, leading to a surge in inquiries about how to best protect a diverse range of fine and rare items. While watches continue to be an important signifier for younger clients, there is a growing interest in collecting sneakers, spirits, and trading cards. Here, we offer our insights into the purchase, care, and insurance of these trending collectibles.  Luxury watches Watches are particularly vulnerable to loss: Due to their wearable and visible nature, watches are an easy target for theft and susceptible to catching onto something and falling off unnoticed. To mitigate these risks, ensure the latch is secure and the watch doesn’t hang too loosely. A loss is particularly easy to recoup: If a lost watch is covered by a valuable article policy, it can be claimed as a mysterious disappearance and its value will be typically reimbursed without much hassle. This same policy also covers stolen items. However, you will not be compensated for a counterfeit watch, so ensure the authenticity of any watch that was not purchased directly from the watchmaker. There are various coverage options available: As with jewelry, you can opt for blanket coverage or schedule each piece individually. Blanket coverage limits payouts, while scheduling ensures each item is insured for its full value. Whichever option you choose, it’s important to maintain detailed, up-to-date written descriptions or photos of your collection, and store these records in a home safe, ideally bolted to the foundation and connected to an alarm. Spirits Beware of counterfeits in the luxury spirits’ market: The luxury spirits market is increasingly plagued by counterfeit products, which can deceive even discerning buyers. To protect yourself from purchasing a fraudulent bottle, always conduct thorough research. Understand the proper care and storage of your spirits: Spirits are more resilient than wine as they will not spoil as easily. However, it is still important to store your bottles in a climate-controlled environment and away from sunlight. Spirits should be kept upright to prevent high-proof alcohol from degrading the cork. Spirit policies differ from standard wine policies: Spirits are not typically covered by standard wine policies. Ask your broker about a premium “all-risk” valuable articles policy to properly protect your collection. Rare sneakers The best protection is prevention: Due to the limited availability of many styles, even adequate coverage cannot guarantee a direct replacement for damaged pairs. We suggest storing every pair of sneakers and their original boxes, in spacious plastic or acid-free containers within a climate-controlled, shaded environment. Understanding the distinction between wearing and displaying: Sneakers lose their eligibility for insurance coverage once they are worn. It's advisable to display them, rather than wearing them, to help preserve their worth and protect from damage. Keep track of their value and inventory: Current carrier policies for sneakers are evolving, typically requiring detailed listings of each pair and its current appraised value. Given the market’s volatility, owners must regularly update these valuations. We recommend documenting your collection with photos or videos for added security. Trading cards Handling trading cards with care: The condition of a card greatly affects its price, and body oils or pressure from your fingers can smudge or otherwise cause damage, particularly to the edges. Keep them in protective sleeves and store cards in binders or card storage boxes in a climate-controlled shaded environment. Know the value of your trading cards: To fully appreciate and manage your trading card collection, it's essential to organize and catalog each item meticulously. By doing so, you gain a comprehensive understanding of what you possess and can accurately assess the value of your collection. Consult your broker for coverage: Card policies, like those for sneakers, are constantly evolving, so it’s crucial to stay informed. Regularly consult with your broker to discuss the specifics of your collection and ensure it is adequately covered. Collecting is a timeless pleasure, and ensuring each piece remains a source of joy is essential. To ensure your collection will be treasured for years to come, be sure you work with a professional with deep expertise in this luxury market. While this brief overview touches on some key points, we are always happy to discuss any specific questions surrounding your collectibles.   ...

Protecting yourself from common liability risks

An unwelcome consequence of prosperity is that high-net-worth individuals become more vulnerable to the threat of personal liability suits, whether legitimate or not – especially in today’s litigious world. Each year brings a new peak in both the number of cases and the total amount paid out through a settlement or judgment. Here are today’s most common liability risks and our advice on how to safeguard against them. 1. Risk: Visibility A magazine feature about your home, social media posts, board service or a garage full of luxury cars — all can attract unwanted attention, even if you aren’t a celebrity. What you can do Limit social media posts highlighting your jewelry, luxury vacations, home furnishings, or other obvious signifiers of a high-end lifestyle. Before speaking in public, consider having your remarks reviewed by a professional to ensure that nothing you say could be construed as slanderous. 2. Risk: Minors and Young Adults As long as minors and young adults permanently reside at your address, you are responsible for their actions. The threat they pose to your liability increases as they get older, such as when they obtain their driver’s license or go to college, where incidents like hazing may occur. Additionally, their social media activity can lead to issues like cyberbullying or unwanted attention to your family’s lifestyle. What you can do As a rule, children are often unaware of liability issues, so it’s crucial to keep them fully informed, especially teenagers who are more likely to engage in risky behavior. Consider enrolling them in a defensive driving course and educating them on the significance of safe driving habits. As much as you can, limit or monitor their social media usage, and never allow alcohol or drugs at gatherings you host. 3. Risk: Entertaining Inviting a large group into your home can be a wonderful experience, but it also comes with elevated liability exposure. Serving alcohol can have serious repercussions should a guest be hurt in a drinking-and-driving or pool accident. What you can do If the pool will be open to guests, it is wise to hire a lifeguard, especially if children are present. Ensure that any outside vendors you hire are covered by their own workers’ compensation and general liability policies. Additionally, consult your broker about situation-specific liability protection. If you frequently host parties, confer with your wealth manager and attorney about transferring your property to a trust or LLC to create legal separation in the event of a lawsuit. 4. Risk: Renovations and repairs Any work being conducted on your property, whether it’s daily maintenance or new construction, exposes you to liability in the event of a worker being injured on the job. What you can do When hiring contractors, prioritize those with solid reputations. Limit the number of subcontractors involved and make sure everyone provides proof of workers’ compensation and general liability insurance. 5. Risk: Driving The potential trouble caused by automobile accidents has increased over the last several years. Texting, talking on the phone or looking at a vehicle’s screen is just as perilous as driving under the influence. What you can do Recognize the seriousness of taking eyes off the road, whether you’re getting directions or regulating the air conditioning. Use technological assists, such as Do Not Disturb, to help avoid the temptation of texting. And, of course, never drive while impaired. Proper Coverage Accidents happen, and with successful individuals increasingly becoming targets of costly lawsuits, it’s important to not only have personal liability insurance but the correct amount. Personal liability insurance is commonly included in policies like homeowners, automobile, and watercraft. It shields you from losses resulting from negligent acts that cause injury, property damage, or reputational harm, except in the event of criminality or malicious intent. However, the amount of coverage provided by these is often limited, therefore, we often recommend purchasing personal excess liability coverage which provides an additional layer of protection. Determining the proper amount of coverage requires a thoughtful conversation with your broker but you can start by taking our Liability Assessment Tool, which helps suggest a range of liability based on your lifestyle. The unfortunate truth is that personal liability risk is everywhere, and while it cannot be entirely prevented, paying extra attention to the scenarios that result in most claims will prove to be beneficial. ...

Four key strategies for the changing reality of natural disasters

2023 was a historic year with over 28 separate weather and climate disasters causing at least $1 billion in damages. The events ranged from winter freezes to wildfires, droughts to floods, tornadoes to tropical cyclones, and heat waves to hailstorms. Although current trends continue to produce significant weather events, it is surprising that a fair number of them occurred in areas that were not previously vulnerable. Take for example, the 4.8 earthquake in New Jersey. While it didn’t cause significant damage, it had been nearly 20 years since the state experienced such magnitude – a reminder that natural disasters no longer follow regional patterns. The reality is that every region is at risk. Climate change and shifting weather patterns have brought significant weather events to areas they never threatened before: Tornadoes in the east: Systems once centered in the plains are now migrating to states as far away as Wisconsin and Georgia. Winter storms in Texas: Deep freezes, the worst lasting weeks, are now near-annual occurrences. Wildfires in high-rainfall states: Look at Hawaii’s unprecedented event in 2023. Flooding in the southwest: Most recently, normally arid areas of Arizona were deluged after record snowfalls in the Rockies resulted in unmanageable runoff. Wind has become a critical factor in the majority of natural disasters s unrivaled speeds and changing patterns turn small fires into uncontainable events and broaden the strength as well as the reach of hurricanes. Since all signs suggest this pattern will continue, we believe that the best path forward is for all clients, wherever they live, to be proactive in their natural disaster risk management planning. More so for types of damage, they might not historically think to expect. Here are four key trends we’ve identified as crucial for today’s natural disaster risk management: 1. Have a maintenance plan. If your local area has not been impacted by weather-related events in some time, it’s easy to let related maintenance fall by the wayside. However, as damage-causing events are more common than ever, it’s important to stay vigilant. This includes: Safeguarding the exterior: Once the barrier to your house is broken, damage can increase exponentially. So, keep trees trimmed, clear brush and clean gutters, inspect the roof, siding, windows, and repair as well as caulk as needed. Inspecting the interior: Maintain furnaces and replace filters, replace rusted parts in water heaters, and install automatic shut-off devices on water lines. 2. Backup power is now essential. Prepare for a potential loss of electricity with a diesel or propane generator. (Solar panels are not necessarily the best solution, because they can be ripped off and rendered useless by wind and convective storms.) Utilities now shut off power preemptively, especially when winds are strong, to decrease wildfire risk. At the same time, weather-event-induced outages last longer and reach further. Without power, your property quickly becomes even more susceptible to damage and loss: alarms don’t function, mold sprouts, and water lines freeze. 3. Establish an evacuation plan. In emergent situations, the people who have already mapped out and practiced evacuation routes are often the safest. So, the best time to create those plans is right now before any threat is imminent. When developing this plan, be sure to document all the details and share this with your property managers and caretakers to ensure everyone is well-practiced and informed: Artwork: Get custom crates crafted to hold your most important pieces and purchase fireproof blankets for outdoor sculptures. Create a fireproof bunker to store the pieces if that’s feasible. If not, arrange for a location to store your collections so they are well protected. Cars: Construct a weather- and fire-proofed garage, or secure a safe place off the property, preferably an inland location. 4. Create an inventory list. In the event of a loss, you will be asked to present an accurate inventory with any claim you make. You can hire a professional for the task or do it yourself; be sure to include photos as important pieces of visual documentation. At the very least, make a video as you go from room to room, capturing all your valuable pieces. Ensuring the security of your inventory is crucial. Storing in a hardware wallet, akin to a flash drive, provides robust protection, even in the face of natural disasters.  Given the impact of significant weather events felt across the country, taking a proactive role in your property’s risk mitigation not only minimizes the possibility of significant loss but helps make your property more insurable. With limited coverage options and carriers evaluating potential customers so closely, a well-maintained home with a detailed risk management plan could be a deciding factor. If you have any questions about preparing your home for natural disasters or other risk mitigation concerns, don’t hesitate to reach out. ...

How we collaborate with your advisors to improve risk management

A commitment to collaboration is a hallmark of our approach. Decades of experience have shown us that we are best able to protect our clients when we work hand in hand with their trusted teams: from wealth managers to CPAs, attorneys to family offices, collections experts, and more. Never, though, has such a holistic approach been more necessary with the insurance landscape being what it is today. As with everything in our practice, the exact manner in which we collaborate is largely bespoke, dependent upon the needs and desires of both the client and the members of their trusted team. However, this overview offers insight into what you can expect or request in terms of our collaborative approach so that risk management is appropriately woven through your ecosystem of advisors. Wealth, financial advisors, and CPAs Wealth and financial advisors often serve as the quarterback for our clients’ assets and portfolio. As such, they are the first to know when a client is purchasing a home or car or if there has been a significant liquidity event that shifts liability coverage needs. The savviest wealth managers have us on speed dial so that we can make their work — and their clients’ lives — easier, better, and more secure. For example, given the challenges of insuring homes in high-risk regions, these advisors will suggest that their clients alert us before making an offer on a property (something we also recommend) so that we can provide insight into coverage possibilities and potential premium costs. Of course, the relationship goes both ways — if a client expresses interest in self-insuring a portion of their portfolio, we suggest bringing their wealth manager into the discussion to ensure that they could weather a potential loss. The more connected we are, the less likely something will be overlooked. For that reason, many wealth managers introduce us to new clients after their initial meeting or add risk management to the agenda at one of the quarterly meetings with clients. Attorneys When you combine an attorney’s training and knowledge of legal issues and an insurance broker’s understanding of risk management, you get powerful protection against even the most difficult risks. For this reason, we regularly collaborate with our clients’ attorneys, as well as other legal specialists, to ensure every “i” is dotted and every “t” is crossed. Take, for example, a client who is interested in jet ownership. The risk of liability is quite high, even if it is partial ownership. While we work to secure coverage, an attorney who specializes in aviation issues can confirm the client’s interests are properly represented in each of the raft of contracts that must be signed. Insulating a client from the potentially massive payouts going forward can be a challenge, so a trust and estate attorney can confer with us to ensure that the client and their plane are adequately covered. Another common scenario: while many families with funds sufficient enough to warrant estate planning can’t imagine the need for life insurance, we regularly counsel attorneys on how to use these policies to achieve maximum tax efficiency and provide the liquidity to cover estate taxes. A risk that is easy to solve but commonly overlooked comes when clients hold a property or LLC in a trust. This arrangement is an increasingly popular way to create separation between individuals and their assets — for privacy, tax, or other reasons — but a prudent attorney would want us to know immediately so that we can ensure there are no gaps in coverage or premium payments from a personal bank account as opposed to the trust or LLC. Family Offices We have decades of experience helping professionals in family offices tackle the risks related to a family’s business, investments, and philanthropic endeavors. The collaboration with family office executives on governance roles in the family’s trusts and estates to ensure proper indemnification through sufficient insurance is just one example. In fact, we are often requested to attend the annual family meeting to help assist them with conversations surrounding risk mitigation as well as education for the next generation. Fine Art Advisors It’s a truism that to collect art is to collect risk. With clients who are just beginning or inherit a large collection, we will work with their trusted art advisors to ensure every piece is properly protected. Working in tandem on appraisals, proper transportation, risks associated with lending or borrowing, and more. Given the impact of natural disasters, we also work with them on properly safeguarding art in your home including an evacuation plan for your most prized pieces. In an era of ever-shifting concerns, we’ve witnessed the power of comprehensive risk management when collaborating with your team of trusted advisors. As your lifestyle evolves, the need for coordination among all professionals is paramount.   ...

A guide to self-insurance

The ongoing challenges of the current market have made insurance quite a hot topic of conversation. Throughout many discussions, one type holds a particular fascination: self-insurance. The increased interest in self-insurance is quite understandable and generally leads clients to ask if they should be considering this option. To answer those queries, this guide discusses the benefits, potential downsides, and a few critical considerations so you can make an informed decision. What is self-insurance? To better understand self-insurance, it’s helpful to understand the difference between risk transfer and risk retention. Purchasing insurance is the most common form of risk transfer. This allows a third party to assume the risk by paying premiums to an entity such as an insurance carrier. One form of risk retention is also known as self-insurance. In this case, an individual chooses to assume the responsibility for a certain level of risk or losses. There are two ways of self-insuring: taking on a higher deductible, thus sharing a greater portion of the risk, or deciding to fully self-insure where you are assuming all of the risk. While self-insurance is an intriguing possibility, it is important to understand the financial exposure you are taking on in the event of a potentially catastrophic loss. That said there is an inherent shift in the mindset around risk management from being primarily reactive — something goes wrong, client submits a claim, carrier reimburses — to focusing on prevention — incorporating risk mitigation techniques such as implementing the latest technologies, materials, and recommendations to avoid a loss. The increase in both the severity and frequency of catastrophic losses has led to an advancement in technology and products to prevent losses. These advancements include sophisticated monitoring systems, protective landscaping, element-resistant materials, and construction and evacuation plans. As such, some people are calculating whether it makes more sense to accept higher deductibles and assume a greater portion of the risk or to fully self-insure and redirect the money into proactively protecting their property. The advantages and disadvantages of self-insuring The upside of redirecting your insurance money is that funds spent on premiums for a policy that covers a high-net-worth home could be placed towards cost-effective protective measures. For example, a home in California’s wildfire region could likely redirect funds to purchase a fire break system, flame-retardant roof, drought-resistant landscaping, or even access to a private firefighting company, therefore mitigating the risk of a major loss. As enticing as having no premiums to pay may sound, it is important to understand that there are disadvantages to self-insuring. First and foremost, the financial obligation associated with a catastrophic loss could be substantial. Additionally, if you choose to self-insure your home, carriers may be less inclined to insure you for other risks, such as an auto policy or significant liability coverage. Moreover, you will no longer have resources such as a dedicated claims team, pre-storm guidance, or priority access to high-caliber contractors that could be available after widespread devastation. Additionally, canceling a policy with an admitted carrier makes it challenging to re-secure a new policy should you change your mind or circumstances change. In this case, you will likely have to leverage a non-admitted carrier which comes at a higher cost. Moreover, you will need to sign a “no-loss letter,” promising not to report any losses that occurred during the period in which you were uninsured. It is important to note that there are several precluding factors for self-insuring. For example, except in very rare instances, a mortgage company will require you to purchase fire insurance to cover the cost of your loan. Similarly, there are coverages required by law whether you self-insure other assets or not, such as workers’ compensation. Leveraging your team of experts before your decision Before you decide to utilize risk retention, it’s critical to consult with your insurance advisor. In this conversation, we will give you an honest evaluation of the advantages and disadvantages of the strategy, for you, as well as a range of creative alternatives. It is best to include tax, wealth, and legal advisors in the decision as they will be best situated to determine if your finances and personal standing could absorb a major loss. We can also provide further guidance on modeling for your portfolio of properties and calculate your probable maximum loss.    We understand the growing movement towards self-insurance and are happy to guide you in a discussion about whether this might be an appropriate choice to explore. Our experience has shown that an educated analysis with a knowledgeable risk management team is crucial to helping you make the right decision about this and every strategic risk management decision. ...

Why young adults need their own insurance

For parents, the worrying never stops, even after their grown children leave the nest. But if that worrying leads to you to keeping those newly independent adults on your insurance program, unfortunately, they will not be properly protected. It is in everybody’s best interest that children secure their own policies once they are living independently. Please do not fret if you are still insuring your children post-college; you are not alone. It is a long-held belief that parents should be responsible for covering their young adults. But it is a belief we work diligently to correct, even as we know that emotional and financial ties can remain quite strong well into adulthood. Because that powerful connection — which recent studies suggest is stronger than ever between parents and grown children — will be much better served by separating insurance policies. This action better protects your family’s assets, and thus the legacy you are building and will eventually leave to your children. It also assures that your child has protection should unforeseen scenarios in liability or auto incidents occur. Convinced? Here’s how to help your grown children make the transition to their own insurance. When should young adults transition to their own insurance? Children need their own policies as soon as they begin to live independently. We understand that “independence” can be a somewhat gray concept, clouded by ongoing familial financial support, additional schooling, and the like. That said, we believe it’s best to err on the side of too soon because you don’t want to wait until it’s too late. Once a child has graduated from school and moved to a permanent address that is not their parents’ they can no longer be considered a dependent. This is true whether they are working, part-time or full-time, or working and attending graduate school. Only if they go straight to graduate school, living in your house during breaks, might they still be covered by their parents’ policies. Even in that case, though, it’s best to confirm their eligibility with your insurance advisor. Why individual insurance is crucial for young adults. Ours is a litigious society, with too many people looking for reasons to sue anyone with means — or anyone who has parents with means. So, your child should have their own liability coverage when they are no longer protected by yours. Liability suits are complicated and potentially costly, whether the case has merit or not. Even if a suit has no cause, and assuming the claim falls within the boundaries afforded by your policy, your child will need legal representation to argue for it to be dismissed. The policies we recommend pay those fees. Similarly, they will redress damages should your child be found negligent. This will be useful to them regardless of how much — or how little — they earn. In fact, though it may seem reasonable to conclude that young adults with no significant assets can do without a holistic insurance program, that is not a prudent calculation. In some cases, judgements can be made that one cannot immediately pay placing wages and other assets at risk. Keep in mind that we are talking about a time of life that is full of unique exposures. Simply put, young adults are most likely to find themselves in risky situations. To take just one example, they are more likely to fall prey to cyber scams because they spend so much time online or on social media platforms. How to equip your young adult with the right insurance.       1. Renters or homeowner’s insurance Of course, if your child has purchased the home they are inhabiting — or you have purchased it for them — they will have to get homeowner’s insurance. Renting may seem a less straightforward proposition, but it’s quite simple: Regardless of the cost or contents of their residence, a renter’s insurance policy is critical because it provides access to personal liability coverage. Think of it not to replace a roomful of furniture, but rather coverage that will protect you and your assets if you’re held responsible for another person’s injuries or damage to their personal property. Young renters should also be aware that everyone sharing an apartment must carry their own policy. Coverage extends only to relatives. (Note: cohabiting partners are not family in the eyes of carriers until they are married.)      2. Automobile coverage The tendency to keep children on the family automobile policy is a problematic one, as coverage extends to them only when they are driving a family vehicle. If you have bought or gifted a car to your child, it is best to retitle it in their name and have them purchase their own policy to limit your exposure should your child get sued after an accident. For young adults who don't own or regularly use a car, we recommend a non-owned auto policy, which provides coverage for when they drive a friend’s car or are hit by a car as a pedestrian.      3. Umbrella policy This additional layer of liability above the renter’s (or home) and auto coverage ensures that your child will be properly protected against lawsuits of all kinds. We recommend a minimum of $1 million regardless of their current total assets.      4. Valuables / Collectible policy Does your child own an expensive watch or piece of jewelry? Whether they bought it themselves, received it as a gift, or have been passed it, like a family heirloom, a lost or stolen piece will not be covered once they move out of your house. Therefore, your child should procure a collections policy to properly cover these items. Just as the separation of parent and child is a healthy inevitability, the separation of their insurance policies is a financial necessity. If you are wondering about how best to approach this important transferal of responsibility, or more generally, to educate your children about risk management, your account executive is ready with the next steps. And if your newly independent child needs help securing coverage, we are here for them too. ...