Why Millionaires Purchase Homeowners Insurance

Millionaires purchase insurance, particularly homeowners insurance and corresponding personal insurance lines, for a completely different reason than the rest of us do.

The reason is liability. Now, what's really interesting is I have this report from Plymouth Rock Insurance, and I'm looking through the findings.

And it shows that only 35% of respondents that were not millionaires only purchased their homeowner's insurance for liability protection.

It provides liability coverage

Now, I write quite a few high net worth accounts, so individuals with home values of a million dollars or more.

And when you talk to them about their insurance program, their questions are never, "I don't need that much building coverage," or "Is my stuff covered?"

Or, "Hey, I have a TV. I want to make sure that's covered." Not that there's anything wrong with those questions, but they focus on liability.

And the reason is, one, often, they tend to be a little more high profile or own companies or on boards or are in positions where liability is a bigger exposure in general.

But also, because they know that the largest hit you can take is in your liability. Whereas the rest of us, just think about our homes.

"What is the mortgage company forcing us to put on this homeowner's insurance policy?"

And we think of homeowner's insurance as an expense and we kind of just brush it off and try to get through it and not think about it.

Your liability, the coverage that's going to respond if you're ever sued, because something really bad happens, something really bad.

If you're a golfer, you're snap-hooking a drive into someone's head and rendering them with brain damage.

And God forbid, it's anyone but a doctor or a lawyer or someone who can then position their career against you and leverage that liability loss.

These are the kind of things that can happen.

Or maybe you have a swing set or a pool or some sort of attractive nuisance, which is really anything that can attract someone to leap over your fence and into your yard.

Whether you invited them in or not, and they get hurt, or God forbid, they perish, you're on the hook for that. That's a liability claim.

That comes back, and your homeowners will defend you if you have the right liability limits and if you have liability in place.

Your homeowners will defend you if you've talked to your homeowner's insurance agent about making sure that the breadth of potential exposures that you have are covered under your liability insurance.

READ NEXT: Buying Homeowners Insurance: Expectations Vs Reality

Purchasing homeowners insurance protects your investment

Now, don't get me wrong, your building coverage, the amount of coverage on your home itself, is very important.

There are other coverages, like water backup and service line coverage and things like that, if you operate a business side of your home, the business pursuits coverage, is very, very important.

But the millionaires, the people who really have a lot to lose, they're thinking about liability.

And I say that to you, only because, whether you are a millionaire or not, I want you to put a little more thought into your liability coverage when you purchase homeowner's insurance.

READ NEXT: What Is Service Line Coverage On A Homeowners Insurance Policy?

The Rub

Homeowners insurance is a key purchase for millionaires and is an investment that should not be overlooked.

It’s clear the policy offers much-needed financial protection that offers peace of mind.

Having sufficient financial coverage for material belongings and liabilities is a crucial part of managing their net worth. 

Whether you’re a millionaire or someone of average means, make sure your investments are protected.

This is where we come in at Rogue Risk.

If your current insurance professional has never addressed issues like this with you before, I’d encourage you to reach out to us today.

• You can call or text us at 518.960.6600
• Click here to contact us via email.

I look forward to introducing you to a new way of viewing your insurance program.

Thank you,

Ryan Hanley