We’ve all heard the saying, “more money, more problems,” which couldn’t be truer for affluent individuals. Due to the size of their assets, high-net-worth (HNW) individuals have more exposure if calamity strikes. Even more, the risk factors affecting them keep evolving, so strategies that work today may not work tomorrow.
To protect this group from risk in the event of loss, let’s look at the three important risk factors facing affluent individuals and why having a regular review of insurance and risk management planning is more essential than ever.
Changes in the structure of the no-fault auto insurance law have increased exposure to lawsuits in Michigan.
The Michigan Legislature changed the state’s no-fault insurance coverage, allowing drivers to select their personal injury protection insurance coverage. Under the new system, drivers can choose one of five personal injury protection (PIP) coverage tiers that guarantee they will be covered in the event of an auto accident. These include:
- Unlimited PIP coverage
- $500,000 coverage
- $250,000 coverage
- $50,000 coverage – for people on Medicaid that cannot opt out of PIP entirely
- Complete opt-out of PIP coverage, for those with separate health insurance that covers collision injuries
Affluent families often own multiple vehicles. If they get into an auto accident and do not have the appropriate coverage under the new system, they may pay expensive medical costs and potentially face lawsuits from the other driver if they’re at fault.
Skyrocketing construction costs due to inflation are impacting the replacement values for property owners, possibly leaving them underinsured.
Home construction costs continue to soar with inflation, due to supply chain and labor shortages. Statistics show that replacement costs have increased by 16.3% from March 2021 to March 2022 countrywide, and construction materials prices by 36%. Labor has also increased from 3.8% to 8%, especially in disaster-hit areas.
In the event of a loss, many affluent individuals want their properties rebuilt to match the pre-loss condition. If an individual fails to update their policy to reflect the current fluctuations, they may be left underinsured, leaving them unable to fund and rebuild in the event of loss unless they pay out of pocket. Needless to say, disasters like Hurricane Ian serve as reminders for families with multiple properties to confirm they have enhanced coverage if they own a home in a vulnerable area.
Increased infrastructure issues are creating more risk for homeowners.
One of the most significant infrastructure issues facing Michigan residents is the corrosion of galvanized plumbing, a common feature in homes built before 1960. Now, over sixty years later, these plumbing systems are at the end of their lifespan due to the dangerous corrosion within the pipes. This corrosion can result in leaks, rust deposits, and high levels of lead in a home’s water supply. Individuals with home(s) built within this timeframe should check for galvanized plumbing to determine if service lines need replacing. To make such a determination, it’s best to reach out to a plumbing professional. This online tool can help, too.
How BakerHopp Can Help
Our process – including our trademarked Personal Risk Assessment – provides a clear picture of vulnerability to risks, insurance program design and personal risk solutions delivered in a simple, straightforward and time-saving approach. The result is a cost-effective, complete insurance program and a sense of ease for affluent individuals and families.
Interested in learning more about our insurance and risk management solutions? We’d love to talk!