Module XII·Article II·~2 min read
Property & Casualty Insurance (P&C) for High-Net-Worth Clients
Insurance in Asset Management
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High-net-worth clients have unique insurance needs: multiple residences in various countries, artworks valued in the millions, yachts, private aircraft, as well as reputational risks. Standard mass-market policies often do not cover these risks.
Characteristics of the Private Client P&C Market
Leading players: Chubb, AIG Private Client Group, Berkley One, Pure Insurance, HSB (Munich Re).
Key product lines:
1. High-Value Real Estate (High-Value Home)
Standard home policies have limits of $500K–$2M. For high-net-worth clients:
Coverage:
- Restoration value (restoration in exact accordance with the original) instead of depreciated value
- Guaranteed replacement cost — no limit
- Additional living expenses — payment for hotel/rental during repairs
- Fine arts in the home (usually a sublimit of $500K–$5M)
- Domestic staff injuries
Multiple real estate: A unified umbrella policy for several properties, including international ones.
2. Automobiles (Collector/High-Value Auto)
Standard policies: ACV (actual cash value) — depreciated. UHNW programs: Agreed value — payout without regard for depreciation.
Specialized providers: Hagerty (collector cars), Chubb Collector Car.
If a garage consists of Ferrari, Bugatti, Rolls-Royce and several classic cars — this is a fleet policy with a separate agreed value for each.
3. Marine Assets (Marine/Yacht)
Yacht up to 80 feet: standard boat policy 80–150 feet: Private yacht policy (Concept Special Risks, Pantaenius) Superyacht 150+ feet: Lloyd's Marine specialty market
Coverage:
- Hull & Machinery (hull and machinery)
- Protection & Indemnity (P&I — liability to third parties)
- Medical repatriation of crew
- Wreck removal
- Charter liability (if the yacht is rented out)
Navigational restrictions: most policies restrict geography (e.g., Atlantic up to 30° N or Caribbean season only).
4. Private Aviation (Aviation)
Fractional ownership: Insurance is provided by the operator (NetJets, VistaJet). Full ownership: Separate aviation policy.
Coverage:
- Hull loss
- Passenger liability ($50–250M per incident)
- Third party liability
- Crew crew workers' compensation
Key factor: pilot licenses and flight hours affect the policy cost.
5. Collectibles (Fine Art, Jewelry, Wine)
Types of coverage:
- All-risk (including accidental damage)
- Agreed value vs. market value
- Worldwide coverage (including exhibitions, transport)
- Mysterious disappearance (disappearance without a trace)
Insurer requirements:
- Professional appraisal every 3–5 years
- Secure storage (for jewelry — a safe of a certain class)
- Air conditioning and humidity control for wine and paintings
The Concept of the Personal Umbrella
Umbrella policy (Personal Umbrella) — additional liability above the limits of the underlying policies.
Why high-net-worth clients need it:
- Major car accident → $10M lawsuit
- Accident on homeowner’s property → $5M lawsuit
- Defamation in the public sphere
Typical limit: $10–50M ($100K–$500K/year premium)
Consolidated Insurance Review
Best practice for FO: conduct an Insurance Audit once a year.
Checklist:
- Are all assets insured?
- Are the insurance amounts current (especially after an increase in the value of art objects)?
- Is there a gap between policies in different countries?
- Are cyber risks covered?
- Are the deductibles optimal?
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