When a puff-back in the chimney of the home of a Rhode Island manufacturing company's CEO caused extensive damage throughout his family's elegant 7,200-square-foot Colonial home, his claims adjuster faced a complex case: The smoke damage to the decorative painting on the living room walls would require careful restoration, while the cleaning of a collection of 19th century books would call for an entirely different expert.

The entire repair would take several weeks to complete, and while the home may have been technically “habitable,” it would not be appropriate for the CEO's 7-year-old son, who suffers from asthma. Finding appropriate and comparable alternative accommodations would become one of the greatest challenges for the adjuster in this case.

Providing expert claims service to the high-net-worth niche can be difficult. Few circumstances can be as daunting as helping wealthy Americans maintain their expected quality of living after a loss.

Following a year when more and more families were displaced from their homes—either because of mandated evacuation or damage caused by unrelenting, record-breaking catastrophes—loss-of-use coverage is more likely to come under scrutiny by policyholders and agents than ever before. The way in which high-net-worth specialists approach this coverage may offer some helpful insights to all carriers.

Living Without Limitations

Coverage can differ markedly, particularly between standard carriers that serve consumers with conventional needs and specialist carriers that cater to successful families with more sophisticated ones. Standard carriers generally cap loss-of-use coverage, or coverage “D” on ISO forms, at 20 percent of the dwelling limit. Following a major or total loss, these funds can run out quickly, especially when impacted families are trying to maintain their normal standard of living.

Specialist carriers are less likely to cap limits at a percentage, and instead typically provide coverage for “reasonable expenses” required for families to maintain their lifestyle following a covered loss. When a policyholder is accustomed to a high standard of living, however, it can be tricky to find the definition of “reasonable.”

Loss-of-use coverage is generally not precluded by a time limit but rather is available throughout the reasonable amount of time required to repair the loss and/or make the home properly inhabitable. The absence of a time limit can be costly when dealing with high-value or unique properties.

Tailored Coverage, Tailored Solutions

Specialist companies have begun to allow policyholders more flexibility to tailor limits for additional living expenses (ALE) to better reflect the fact that every family will have unique needs and expectations following a claim. For example, in coastal areas—where premiums are typically at their highest—owners of second homes may be able to control premium costs by opting for lower limits for ALE, because of their ability to live in one of their other residences following a loss. Regardless of limits, however, high-net-worth policyholders in need of temporary living accommodations expect a tailored response.

Providing a Service Touch Point

Loss-of-use coverage provides an opportunity for insurers to act as service providers—and to make a terrific impression on their policyholders during troubling times. Many companies are quick to put the onus of finding a rental or temporary property on the policyholder, but high-net-worth specialist insurers have created a superior experience for their policyholders.

Following a loss, specialist carriers are committed to helping their policyholders create a temporary living situation that accommodates their lifestyle and needs. Each situation takes into account where the adults work, where the children go to school, whether they have pets, what kind of accommodations their home provides them, and how long they'll be displaced. This kind of attention to detail can make all the difference to a family facing a major loss and certainly elevates the level of service provided.

Creating Brand Loyalists

The high-net-worth market is a demanding niche. By providing superlative loss-of-use services following an event that renders a residence uninhabitable, carriers have the opportunity to win customers for life and engage additional customers through word-of-mouth advertising. Whether a family will be displaced for two or three nights and a nearby hotel will serve them well, or a total loss forces a family out of their home for several months, hard-working and creative claims professionals can often find unique solutions and generate tremendous brand loyalty.

Special Reports /

The Value Is in the Service

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