By The Clifford Group
Picture a warm Saturday at the lake house. A friend of the family slips on the dock, takes a hard fall, and spends the next few weeks in recovery. Months later, a lawsuit arrives. The family assumes their umbrella policy has them covered. Then comes the surprise: the lake house policy was set up years earlier with a different carrier, and its liability limit doesn’t meet the umbrella’s requirements. Suddenly there’s a gap nobody knew existed.
That scenario is hypothetical, but the gap behind it is very real. Most families with significant wealth have spent years building it with care, through portfolio reviews, estate plans, and tough tax questions. Insurance, meanwhile, often lives in a drawer, renews automatically, and rarely gets a second look. We understand. Nobody wakes up on a Saturday morning excited to read a policy declarations page.
The trouble is that coverage tends to get set up once and then quietly fall behind. Life gets bigger, and policies often stay the same size. In a 2022 survey for the American Property Casualty Insurance Association, only 30 percent of insured homeowners said they had increased their coverage to keep up with rising building costs. Here are four areas where affluent families are commonly underinsured, and why they’re best reviewed together.
Why Umbrella Liability Insurance Limits Often Fall Short for High-Net-Worth Families
Umbrella coverage sits on top of auto and homeowners liability and steps in when those underlying limits run out. Many families purchased a $1 million or $2 million umbrella years ago and haven’t revisited it since. At the time, it probably felt generous.
The uncomfortable truth is that visible wealth can make a family a more appealing target for lawsuits. A car accident, a guest injured by the pool, a heated comment posted online, or a seat on a nonprofit board can all create liability exposure. Legal defense costs alone can climb quickly, even when a claim has little merit.
A thoughtful review usually starts with a few questions:
- Does the limit reflect today’s net worth and lifestyle, or the ones from a decade ago?
- Are all household drivers, including young adults home from college, properly listed?
- Does the policy address personal injury claims such as defamation, or only bodily injury and property damage?
There’s no universal “right” number. An appropriate limit depends on assets, income, activities, and comfort with risk, and it’s a conversation to have with a qualified insurance professional. What we’d gently push back on is the assumption that a number chosen years ago still fits today.
Insuring Multiple Homes: Coverage Gaps Between Primary Residences, Vacation Homes, and Rentals
Owning more than one home is a wonderful thing. There’s the lake house where the grandkids learn to fish, the ski condo, and the warm-weather escape for January. Each property brings joy, and each one brings its own insurance puzzle.
When homes are purchased at different times, they’re often insured through different carriers, with different agents, on different renewal schedules. That patchwork can hide problems that only surface after a loss. Rebuild cost estimates may not have kept pace with construction and labor prices. Vacancy clauses can limit coverage when a home sits empty for long stretches. Flood, wind, earthquake, and wildfire exclusions vary by region, and short-term rental activity may not be covered by a standard homeowners policy at all.
Then there’s the issue from our lake house story. Many umbrella policies require specific underlying liability limits on every property. If one home falls below that threshold, there could be a gap between where the home coverage ends and where the umbrella begins. It’s exactly the kind of detail that slips through when five policies live in five different filing cabinets.
Consolidating with a carrier focused on high-value homes isn’t right for everyone. Even so, a side-by-side inventory of every property and its coverage can be surprisingly eye-opening.
Fine Art, Jewelry, and Collectibles Insurance: Why Standard Homeowners Policies Aren’t Enough
Ask a collector about a favorite piece and the stories start flowing. It might be a grandmother’s painting, a wine cellar built one bottle at a time, or a shelf of rare first editions. These objects carry memories, and sometimes they carry considerable value too.
Standard homeowners policies typically include sub-limits for categories like jewelry, fine art, and collectibles. Those sub-limits can be strikingly low compared to what a collection is actually worth. To a standard policy, a treasured painting can look an awful lot like a nice poster. A family might learn after a theft or fire that coverage tops out at a fraction of a piece’s value.
Collections also change. Values move with the market, new pieces arrive, and old appraisals may no longer reflect current worth. Practical steps include:
- Keeping an updated inventory with photos, receipts, and provenance records
- Scheduling periodic professional appraisals, especially for items that may have appreciated
- Confirming protection for items in transit, on loan, or stored off-site
There’s an estate planning angle here as well. Collections often hold deep emotional meaning for the next generation, and deciding who inherits what can stir up feelings. Clear documentation supports insurance claims, and it can also help families have calmer, kinder conversations down the road.
Household Employee Insurance: Workers’ Compensation and Liability for Nannies, Housekeepers, and Caregivers
This one tends to catch families off guard more than any other. Nannies, housekeepers, private chefs, caregivers for aging parents, estate managers, and drivers become part of daily life and, often, part of the family’s heart. Many households simply don’t think of themselves as employers.
Under the law, they frequently are. Depending on the state, families with household employees may be required to carry workers’ compensation coverage. If a housekeeper falls from a ladder or a nanny is injured while driving the kids to soccer practice, the family could face significant costs without the right protection in place.
Employment practices liability coverage deserves attention too, since it may address claims such as wrongful termination or harassment. Auto coverage matters whenever staff drive family vehicles or use their own cars for errands. Payroll tax and reporting obligations connect everything back to the broader tax picture.
None of this is meant to make anyone nervous about hiring help. Wonderful household staff can be a genuine gift. Getting the structure right simply protects everyone involved, including the people who take care of the ones you love.
Why Coordinating Insurance, Estate, and Financial Planning Protects More Than Any Single Policy
Each of these risks is manageable on its own. What makes them tricky is how closely they connect. An umbrella policy depends on underlying home and auto limits. Art coverage ties into estate planning. Household staff touch payroll, taxes, and liability. When every piece is handled by a different professional who never talks to the others, cracks can form in the spaces between.
That’s where coordination makes a real difference. A wealth advisor who sees the full financial picture can help raise the right questions, organize key documents, and bring the insurance professional, estate attorney, and CPA into the same conversation. The goal isn’t to replace any of those specialists. It’s to make sure everyone is working from the same map.
At The Clifford Group, our team views risk management as one part of a broader, coordinated wealth plan. It’s the same approach we bring to our family office clients. Think back to that family at the lake house. Their problem wasn’t a lack of insurance. It was that nobody was looking at all of it together. Protecting what a family has built, and the people they love, shouldn’t depend on whether someone happened to remember a renewal date.
Frequently Asked Questions About Insurance for High-Net-Worth Families
How much umbrella insurance does a high-net-worth family need?
There’s no single answer. Many families review their limit against net worth, income, and lifestyle factors such as teen drivers, multiple properties, or board roles. A licensed insurance professional can help determine an appropriate amount.
Do families need workers’ compensation for a nanny or housekeeper?
It depends on the state and the employment arrangement. Some states require coverage for household employees, so it’s wise to confirm local rules with an insurance professional or employment attorney.
Does homeowners insurance cover fine art and jewelry?
Usually only up to certain sub-limits, which may be far below a collection’s value. Scheduled or specialized collectibles coverage is often used to close that gap.
Schedule a Coordinated Insurance and Risk Management Review
If it’s been a while since your coverage had a fresh set of eyes, now may be a good time to start. Our team is happy to sit down, listen to what matters most to your family, and help coordinate a thoughtful review alongside the insurance professionals you already trust.
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Important Information:
The Clifford Group LLC, The Clifford Group, is a registered investment advisor. Advisory services are only offered to clients or prospective clients where The Clifford Group and its representatives are properly licensed or exempt from licensure. This material is for informational purposes only and is not intended as personalized financial, legal, tax, lending, or investment advice.The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. The Clifford Group and its advisors do not provide legal, accounting, or tax advice. Consult your attorney or tax professional.
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