5 reasons wealthy Canadians should check their insurance coverage
Unique vacation homes, valuable collections, and families in the spotlight…there are many reasons wealthy Canadians should consider specialty insurance services. Here are some ways you can ensure you and your loved ones are protected.
The gold coin celebrating the assassination of Julius Caesar is one of the rarest in the world. It depicts one of history’s most famous events, the day that Roman dictator Julius Caesar was publicly murdered at the height of his power by conspiracy of political enemies. On one side is the ringleader — and Caesar’s close friend — Marcus Brutus; a pair of daggers is on the other side along with the now infamous date: the Ides of March.
Three of these coins still exist. Melted down, one might be worth about a thousand dollars. But at a recent auction one of the coins sold for a record US$3.5 million.
Imagine if you were one of the centuries-long list of owners of that coin. Not only would you be awestruck to possess such a piece of antiquity, but you would be extremely concerned that this fragile object could disappear without proper steps to protect it. Naturally you would want to work with preservation and insurance teams to ensure it can continue to pass through history.
High net worth individuals have complex insurance needs. They not only have extensive assets but these possessions and properties are often exclusive and present special challenges to protect.
“The big advantage for private client insurance, as we call it, is the bespoke service it brings. It’s not cookie-cutter coverage for cookie-cutter items. Each item gets expert and evolving appraisals to ensure the replacement values are never dated in this changing world,” says Davina Boulineau, Associate Vice President, Private Client Advice with TD Insurance.
We spoke with her about the top five areas where wealthy Canadians have unique insurance needs.
Whether your home was designed by a famed architect, furnished under the direction of designers, or filled with imported flooring, textiles, and art, your house is a reflection of your character. Many specialty homes are also heritage properties in which age and particular materials can present special replacement challenges. All the unique designs and finishes of your home need proper consideration and coverage, which means having an expert come out to property assess it.
As well, says Boulineau, vacation homes can present unique insurance issues. If you have a secluded home on an island in cottage country, for instance, the setting may ensure privacy but hinder emergency services in the event of a fire, flood or security concern. She says high tech monitoring and the services of private companies may be needed to guarantee the home is safe and well-maintained year-round.
“People put a tremendous amount of funds into making their homes beautiful but two-thirds of high net worth homes are completely under-insured. With rising costs in construction, people should be certain that their current coverage is adequate for their needs,” says Boulineau.
The finer things in life include such pleasures as designer jewelry, watches, original art, and vintage wine. Jewelry can be treasured and also be passed down as heirlooms. But unlike other valuable items, these pieces may travel with you daily and in this way they must be protected whether you are in your home, office or on vacation a world away. Each item must be carefully appraised on its own.
Wine can not only be appreciated at a tasting or with a great meal, but can also be a profitable hobby if you wish to invest in rare bottles and put them on the market years later. In such cases, your cellar should be protected against sudden and accidental types of spoilage relating to changes in temperature, vibration, light and humidity.
In the case of an art collection, you may wish to display it in public galleries. The work of preservation, display, transport and storage is an industry in itself: Each process comes with a certain risk and demands the right insurance coverage to verify these precious objects are protected.
“Clients like to work with their favourites experts in these fields — and no one else — and insurance agents must be part of this team to make sure they know about any specialized issues around these collections,” Boulineau says.
Family in the spotlight
No one likes to see their names in the headlines for the wrong reasons. But many wealthy people find themselves in the public eye and that unfortunately can lead to security issues. While personal threats are rare and can be dealt with using professional security firms, interactions that can lead to nuisance lawsuits are more common, Boulineau says. These may include accusations of libel, slander, defamation of character, mental injury and wrongful eviction. Boulineau says that many well-off people can be unwitting targets in everyday interactions with the public just because of who they are.
“You may have a party where someone drives home intoxicated or slips on a wet deck — you could be held liable for that and you should be protected from these chance encounters,” she says.
Liability coverage may also be needed if someone sits on the board of a non-profit business. Boulineau says that not only should people be covered for a wide range of liabilities but also have policies that have defence costs above and beyond the liability coverage limit to ensure adequate legal resources are available at all times, and in any region of the world.
Vintage and luxury vehicles
Many people also own Maseratis, Lamborghinis, and Bugattis — often more than one. While she says that the vulnerability to theft for these kind of cars is a concern, like other collectible items, these cars need proper storage and maintenance, and each individual vehicle must be appraised so that its replacement value is up to date. Many owners know that repairs are expensive and it takes master craftspeople to keep the cars in mint condition. There may be a limited number of qualified body shops and repairs may have to be made with tools unique to the vehicle. Replacing even a small tear in the seat cover of a Lamborghini so that it resumes its pristine appearance may cost a small fortune, says Boulineau. This can apply to other vehicles you own, from pleasure craft like sail boats and jet skis to golf carts.
Profitable second homes
One of the more recent trends for high net worth families has been to rent out second homes or vacation properties when they are not in use. This can actually be a lucrative side business for homes that are opulent or of historic value, because they command much higher fees. However, Boulineau says precautions must be taken so that the risks don’t outweigh any financial benefits, and says existing policies with digital booking agencies may not be adequate. These concerns must include protection from damage and vandalism. Moreover, few homeowners want to hound casual visitors to compel them to pay for damages they’ve made to a property. Allowing strangers into a beloved home may make any owner nervous, says Boulineau, but getting the proper rental coverage may make this kind of enterprise easier to deal with.
Boulineau says her clients know they need insurance but want the knowledge that their valued possessions will be looked after by highly trained professionals, who can provide a responsive and personalized service tailored to meet their distinctive requirements. She says people with exclusive insurance needs should contact TD Insurance Private Client agents for guidance. Otherwise, you could be looking at inadequate or overpriced coverage, delays and unresolved and disputed claims.