Insuring high-net-worth individuals is a terrific business, withstrong long-term financial performance and interesting, rewardingwork. If you're succeeding in this business, your network ofreferral sources includes members of the wealth managementcommunity, including registered investment advisors (RIAs), familyoffice advisors and private bankers. Referrals from this communityare coveted. I've met dozens of them, and they describe how thebest agents and brokers differentiate themselves.

Consider estates and asset protection“

As families increasingly focus on asset protection concerns, wesee them using limited liability companies (LLCs) to separateliability associated with tangible assets from other kinds ofproperty,” said Kevin Luchetta, CFP Wealth Advisor with PioneerFinancial of Northwestern Mutual Wealth Management Co. LLCs can ownhomes, yachts and other assets to keep potential liability fromtheir other assets. These entities are listed as additional namedinsureds. One client had an estate plan, with homes owned by LLCs,which are actually owned by other LLCs. “During our initial review,the homeowners' policy he shared with me had no additional namedinsureds. That was one of the first things we addressed so now thetechnical owner and occupant are properly listed.”

Ensure that trusts, commonly used in estate planning, are alsoidentified and properly listed in the insurance program.

Take a good look at the umbrella

“By far the single most important specific coverage issue weaddress is personal excess liability insurance, because it helpsshield the family's assets from claims,” said Gary Pasternack,director of insurance advisory at Bessemer Trust. “Often clientscome to us with inadequate limits.” High-net-worth specialistinsurers like ACE Private Risk Services, AIG Private Client Group,Chubb, Fireman's Fund and PURE all offer excess liability limitsthat far exceed what is available from direct writers and otherstandard personal insurers.

Pasternack suggests that net worth should not include protectedassets like qualified retirement accounts, irrevocable trusts andhomesteaded residences, but should include five to 10 years ofirrevocable trust distributions or other substantial incomedepended upon to pay living expenses.

Shield the client's wealth from theuninsured

The InsuranceResearch Council (IRC) estimates that 12.6% of motorists wasuninsured in 2012. Oklahoma, Florida, Mississippi, New Mexico,Michigan and Tennessee are among the worst for this, as the IRCestimates that at least one in five motorists in these states isuninsured. Comprehensive reviews of wealthy families uncovermissing or inadequate UM/UIM coverage.

Mind their businesses

Commercial exposures are common and diverse in this niche.Sometimes they stem from the property itself, such as gentlemanfarms, ranches, or historic homes that are regularly toured by thepublic. Other times, the owner's primary business creates the risk,such as the independent consultant who works out of a home office.The 'incidental business' coverage found on homeowners' formstypically isn't enough and professional liability is likelyexcluded. A specialist insurer will endorse additional coverage toaddress the exposure; in many others, obtaining commercial coverageis necessary.

The nanny and the home aide

Be sure to identify all of the domestic staff and list them onthe appropriate policies. Just because that nanny, chef or gardenerhas been with the clients for a long time doesn't mean employmentpractices liability coverage isn't necessary. What's more, becomean expert in domestic workers' compensations laws, options andprocedures so you can be an advocate for clients with qualifyingemployees, whether the coverage is compulsory or not in a givenstate.

ID the D&O risk

It's quite common for wealthy clients to serve as directors orofficers for a variety of professional, philanthropic or othernot-for-profit organizations. What's important is that you find allof them, then obtain the appropriate coverage, whether personal,commercial or both.

What Size Umbrella?

While eliminating coverage gaps is formulaic, choosing anumbrella limit is not an exact science. Most agree that the limitshould be influenced by the value of the assets at stake, thefamily's risk tolerance and lifestyle-related risk profile. Clientsshould maintain a personal excess liability limit that is at leastequal to their net worth, up to $20 million, says Gary Pasternack,director of insurance advisory at Bessemer Trust. “Greater coverageamounts should be considered when the client has an exposure to alarge liability loss or has a low tolerance for the risk.”