“Why is group personal excess insurance an option worth considering?” By Bruce Gendelman, JD, Chairman, and Joseph Gendelman, President and CEO
High net worth individuals have the opportunity to protect themselves with a unique approach to personal excess insurance: the group personal excess policy. This policy can safe- guard your assets in the event a lawsuit is filed against you. It covers accidents on your property or on the road, libel or slander charges, not-for-profit board liability and personal employment practices liability, as well as defense costs paid outside of policy limits.
I already have a personal excess policy, why would I need this? Most insurance policies already have property and liability coverage within the homeowners coverage, and some clients have personal excess liability above that limit. However, most insurance companies do not offer limits that meet the exacting needs of affluent individuals and their families. In the event of a lawsuit, if you are not insured with the proper limits, you may be forced to surrender material assets and even salary.
How is a group personal excess policy different from what I have? Group personal excess is a benefit that companies offer either as a mandatory or voluntary program. It replaces the individual excess liability policy that covers persons and their families individually, while maximizing purchasing power as a group. A group may be defined as a company’s executives, directors, partners and other senior-level employees. A group may also be defined as a family office or a family pooling together as one unit.
What are some of the advantages of a group personal excess policy?
- Discounted premiums. Savings due to the group’s buying power are locked in for the entire year even if additional properties, vehicles, etc., are added. Group members pay the same price for the same limit of coverage as fellow participants.
- Easy customer reporting. Unlike a traditional personal excess policy, you do not need to notify the insurance carrier when new purchases are made; you can wait until the renewal date without sacrificing automatic coverage.
- High limits of $5 million to $100 mil- lion are available. Worldwide protection also follows you wherever you go.
- High limits of UM/UIM available (uninsured/underinsured motorist). An estimated one in six drivers is uninsured, and those with insurance may not have enough coverage to properly compensate for your loss.
- Defense costs paid outside of policy limits. If the defense costs were included within the policy limits, protection could erode quickly and might leave significant out-of-pocket expenses. Participants may also play an active role in selecting legal representation from litigation specialists.
- Expanded legal defense coverage. This may be included to reimburse participants for some legal-related expenses, and their personal attorney can participate in the defense strategy.
- Errors and omissions coverage built in for the sponsoring organization.
- Employer-added benefit offering for employees. The program can be firm subsidized, employee subsidized or a combination of both.
Group personal excess is a specific insurance option for those looking to maximize coverage, flexibility and pricing for employers, employees and family organizations. Personal insurance carriers are continuing to raise the bar regarding product and service offerings. When seeking an insurance firm, make sure the broker has a thorough knowledge and working expertise of the ultra high net worth insurance market. Additionally, a firm that can guide you through this unique product offering and provide valuable advice on group personal excess program design, employer offerings, coverage options and claims mitigation is a must.
Article originally appeared in Worth magazine.