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The Group Excess Liability Solution

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$53.5 million, $11.3 million, $5 million, is not what the Boston Red Sox have spent on individual contracts this off-season, but rather these are actual settlement amounts awarded against the High Net Worth in recent years. The uncertainty of the current economy has shown that affluent people are more likely than any other time in our history, to be targets of multi- million dollar lawsuits. As a Wealth Manager, you can prevent liquidation of your client’s assets resulting from such claims by recommending an Excess or Group Excess Umbrella Policy. The intention of this policy is to extend Liability Coverage over the existing Home, Auto and Watercraft Policies. Group Excess Umbrella limits generally range from $5million to $50million.

In addition to protecting your client’s portfolio positions, Financial Institutions (Investment Managers, Brokers, Family Office Programs…etc) can use the Group Excess Umbrella Policy to attract Key Individuals or retain your most valued employees/members by giving them access to superior Umbrella Coverages. If the “right” coverages are not in place, one could lose many of the assets they’ve worked a lifetime to accumulate.

Following are examples of real life cases where a Group Umbrella most likely would have responded to the settlement.

Verdict/Settlement-$53.5 million-Automobile accident in Missouri-A female suffered multiple facial fractures and emotional distress after the car she was passenger of was hit head-on by the male defendant’s vehicle*.

Verdict/Settlement-$11.3 million-Social Media Defamation Lawsuit in Florida-Suit brought by a Florida consultant against a Louisiana woman for posting defamatory statements about the plaintiff on an internet bulletin board. The defendant called the plaintiff a “crook” and a “fraud.”*

Verdict/Settlement-$5 million-Private Home Accident in Massachusetts- A 20 year-old female suffered from a foot fracture and Reflex Sympathetic Dystrophy Syndrome after the male defendant fell on her while she was a guest at his home. The plaintiff accused him of being intoxicated at the time of the incident and concluded that his negligent behavior caused her injuries.*

Four unique features of a Group Excess Umbrella Policy

  • Underwriting is done on a group basis making it more relaxed. Example- highly successful families cannot get the coverage they need because of a new driver (son or daughter) on the underlying auto policy has a bad driving record. Group Excess Umbrella could be the perfect solution as the risk is “spread” though the “group” making it easier for that family to qualify.
  • The dollar premium per coverage is generally lower. Just like going to Sam’s Club where you receive savings for buying in bulk the same can be said for the Group Excess Umbrella where program participants will find program rates offer savings over comparable limits from standard insurance carriers.
  • Higher Limits and Broader Coverages. Affluent families and individuals often require umbrella limits NOT offered by standard insurance carriers. Many standard carriers limit their policies to 5 Million and do not offer Uninsured/Underinsured Liability coverage and other Third Party Liability coverages the High Net Worth Family needs to properly protect their unique lifestyles and assets.
  • Customizable to fit the specific needs of the group with the ability to select optional coverages at the participant AND group level.

According to the November/December 2014 issue of Private Wealth Magazine, 89 Family Offices were surveyed and the results showed only 6.7% provided Property/Casualty services in the last 2 years. There is great synergy between the world of Property/Casualty and the world of Wealth Management. In today’s ultra-litigious society not only can you separate yourself from your competition by discussing the Group Excess Umbrella you can go a long way to insulating their assets in the event of a law suit. 

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