While affluent households typically maintain careful oversight of their investment portfolios, these same families sometimes neglect crucial financial protections for two of their most valuable assets: their homes and everything inside them.

The consequence: Many families may be unnecessarily exposing a vital portion of their wealth and security to risk.

This makes it crucial to review how your residence fits into your financial planning to identify potential issues that need attention—before they escalate into severe problems that could damage your wealth beyond easy repair.

​Generally, the most serious issues in protecting a primary or secondary residence financially arise from inadequate insurance coverage. Here are key examples.

Does your umbrella policy match or exceed your net worth? Although many affluent families maintain umbrella policies, our research shows that a substantial number have insufficient coverage. Specifically, when your net worth surpasses your liability coverage, increasing your protection deserves serious consideration. Umbrella policies typically represent the most economical and efficient form of asset protection available.

Example: Consider a hypothetical affluent family possessing a net worth exceeding $10 million but maintaining only a $1 million umbrella liability policy. Their property and casualty agent hasn't coordinated with their financial advisors for years. Due to asset positioning and planning implemented by their financial advisors, their lawsuit-attachable assets total approximately $6.5 million. This means that with only a $1 million umbrella policy, over $5.5 million of their net worth remains vulnerable.

​Pro tip: Work to determine your lawsuit-attachable assets and set umbrella limits to protect either that amount or your complete net worth if you've undertaken minimal planning. Remember to specify all items that should be listed on the policy.

Many affluent families own several properties—perhaps a primary residence plus a vacation home—often situated in different states. This arrangement can create difficulties, especially when different insurance companies cover each property.

​Example: Consider a hypothetical family maintaining a primary residence in New York state, along with a South Florida beach house and an Aspen ski residence. While they maintain insurance on all properties, each home carries a separate policy with different agents. For optimal protection and potential cost benefits, all policies should ideally be consolidated with a single high-net-worth insurance provider.

Sophisticated affluent families frequently utilize trusts and LLCs effectively within their estate plans. However, many neglect to list these entities as additional insureds—an oversight that can prove costly.

Example: Consider a hypothetical retired executive and spouse who move to South Florida seeking health and tax benefits. After establishing residency, they create a new estate plan, placing their Florida primary residence in an LLC and transferring their Maine vacation property to another LLC.

​During the following year's off-season, their Maine property's caretaker experiences a serious fall inside the house and initiates legal action. However, the newly created LLC (now holding beneficial ownership) was never designated as an insured party on either the homeowners or umbrella policies. Result: The couple must cover the settlement personally, incurring substantial financial losses.

Some affluent families own historic properties incorporating unique construction elements and premium materials. Overlooking these special characteristics could mean rebuilding expenses far exceeding insurance coverage.

​Example: Picture a hypothetical Florida couple acquiring a historic Palm Beach estate featuring pecky cypress woodwork throughout. This wood, though once common, is now rare and extremely costly to replace. Without engaging a specialized high-value insurer capable of properly evaluating and insuring these unique materials, the owners remain unaware that replacing the marble, plasterwork, and pecky cypress would cost significantly more than standard building materials. When fire strikes during kitchen and bathroom renovations, they face enormous uncovered expenses.

Many affluent families own valuable art collections or luxury vehicles. Others possess horses, while some maintain aircraft or yachts.

Example: Picture a hypothetical California couple whose passion for art has led to three decades of collecting. Without recent appraisals, they're unaware of their collection's total value, assuming their homeowner's policy provides adequate protection. When one piece sustains damage, they discover its unexpectedly high value and learn their homeowner's policy's personal property coverage falls far short of replacement cost. They promptly contact a recommended agent to individually insure each artwork—action that should have been taken initially. A scheduled art policy protects values even as they appreciate since the last appraisal, with no deductible applied. The insured receives full compensation for losses.

This principle applies across all high-value collections. Premium assets require dedicated policies that reflect accurate values and eliminate deductibles.

​The upshot: Just as regular maintenance of your roof and gutters is essential, periodic evaluation and adjustment of your home insurance protection is equally vital.