No matter what you do in life, you’re likely to encounter some risks. Whether you own your own company and lead a team of five or 500, or you’ve made a name for yourself financially in other ways and have accumulated a fair share of wealth. Whatever the circumstances may be, it’s essential to think of personal risk management in order to protect yourself and your assets for years to come.
With every new asset you gather comes a new set of risks you want to mitigate to protect yourself, your belongings, and your family. This is typically in the form of insurance (homeowners, auto, jewelry, and more), though everyone’s risk management plan looks different depending on their location, career, assets, etc.
Here at Odell Studner, we understand that creating the perfect risk management plan can feel overwhelming–especially if it is something that you have never dealt with in the past. Maybe you’ve never even heard of the concept of risk management plans until recently. Wherever you are in this process, we’re here to inform you of the different options that you have, why it’s so important, and help you tailor a plan that’s perfect for your lifestyle.
What is Private Risk Management?
When it comes to risk management, there are two different kinds of risk to be mindful of. The first is a speculative risk. These kinds of risks are typically avoidable by simply not partaking in them. Think business ideas that may fail or investing in stocks that could provide no return. There’s not really any insurance that you can take out to protect yourself in these instances. However, with pure risks, you have a higher chance of protecting yourself and your assets.
So what is a pure risk? These are typically accidental. This may look like a car accident, unexpected illness, or natural disaster. When you can quantify the risk, you have the ability to put a price on it. Therefore you can take out insurance should one of these circumstances arise. While you may not be able to avoid these risks entirely, you can reduce the likelihood of injury, illness, etc., by creating a risk management plan.
All of this to say, private risk management is extremely important. Private risk management is the path for individuals to secure a personal insurance program customized to their lifestyle to adequately protect their assets. High net-worth individuals have greater risk involved with their valuables/assets, and a proper personal insurance program can be the solution to mitigating this risk.
Personal Insurance Coverage for Affluent Individuals
While there are many different companies out there that offer personal insurance, the number of companies that focus specifically on affluent individuals is much lower. And when you have expensive assets such as your home, boats, timeless jewelry, etc., you want to ensure that you are protected. Luckily, all of these (and more) are covered through personal risk management plans.
High-Value Homeowners Insurance
When disaster strikes–whether it be a natural disaster or theft–the last thing that you want to worry about is how you’re going to replace your valuables and your home. That’s where high-value homeowners insurance comes in.
While many insurers cover the cost of small to mid-sized homes, if your home (or vacation home) has a replacement cost of $1 million or higher, you’re better of with high-value homeowners insurance. Not sure if you fall into this category? When considering it, you’re not going based on the market price of your house but rather on how much it would cost to rebuild if needed.
Along with the ability to rebuild your home, your high-value homeowners insurance may also include unlimited living expenses while your home is being repaired, medical payment coverage, debris removal, water backup coverage, and more.
Jewelry/Valuables
According to a study by Statista, there are 7.89 million people in the United States with financial assets worth at least $1 million. That means the chances that many of those 7.89 million individuals are owners of expensive, timeless jewelry and valuables. As mentioned earlier, your typical homeowners insurance coverage will likely cover your jewelry. However, it’s also likely that the coverage will fall short of your needs for your high-value pieces. The typical coverage is about $1,500, which is much lower than you’re probably hoping for. That’s why keeping your engagement rings, wedding rings, earrings, watches, bracelets, etc., safe with a more thorough coverage is of utmost importance.
Special Auto Insurance
Having car insurance is a must if you are on the roads. However, if you have made any specializations or customizations to your vehicle, or you own a classic/collectible car, you’re going to want to take it a step further with special auto insurance.
Yacht Insurance
Of course, if you own a yacht, you’re going to want to do everything in your power to keep it protected. And the easiest way to do so is by getting yacht insurance. When searching for yacht insurance, you’ll find two different options: actual cash value (ACV) or agreed value. You may also find that depending on the insurer, you can receive a discounted rate based on your education, safety features, and what kind of yacht you own.
While there is no standard definition of what size a boat needs to be to be considered a yacht, many consider a boat over 40 feet a yacht. And when insuring it, you’re given liability coverage and hull insurance. Some providers also include towing, gas delivery, and more.
How Do Private Risk Management and Personal Insurance Plans Work?
Step 1: Complete a Personal Risk Analysis
There’s a lot that goes into tailoring the perfect risk management plan for your needs and lifestyle. Before you can create a plan, you need to complete a personal risk analysis. At Odell Studner, our evaluation analyzes your assets and conducts in-depth interviews to get a complete understanding of your possessions and what it is your end goal is. This helps us identify potential risks, which then helps us develop a risk management plan.
Step 2: Develop a Risk Management Plan
After a personal risk analysis has been run, it’s time to develop a plan. This is typically split into three sections depending on the level of risk and the impact that they have–low, moderate, and high risk. This is also known as a risk register. Once you have this risk register, you can spot what insurance you need most, what steps you can take to avoid running into larger issues, etc.
For example, many plans will be laid out in terms of the risk to mitigate, the strategy used for said risk, the cost and time it may take for this solution, if there is any postimplementation maintenance needed, and what the benefit of it is. To break it down further, your plan will look something like these three steps:
- Prepare
- Predict to prevent
- Respond
Step 3: Monitor Risks – Quarterly Check-ins
Once you have these plans in place for all of your potential risks, we then monitor them with quarterly check-ins. This helps keep track of those three steps we just mentioned within your plans and see where you’re falling within every risk that you have listed. If something isn’t working, this allows us to reevaluate our plan. Doing regular check-ins also helps us spot new risks that are bound to pop up every now and then.
Step 4: Proactive management of Renewal program
The very last step in creating a personal risk management plan is the proactive management of renewal program. This typically includes a pre-renewal discussion on changes in assets, lifestyle, and concerns, along with a pre-renewal discussion with insurance providers to ensure the best terms. Following this, an annual meeting takes place to discuss renewals and any recommended changes.
At Odell Studner, our risk management advisors serve as a risk management quarterback connecting you to any desired risk management services that are offered, whether that’s future plans for a new home, remodeling your current home, or large purchases such as watercrafts.
Speak with a Risk Management Advisor from Odell Studner Today
While we may do everything in our power to protect ourselves from the risks of life, some things are just unavoidable. Life may be risky, but having a risk management plan can save you from losing thousands of dollars and important belongings. That’s why we believe it’s one of the smartest financial decisions you can make for yourself, your business, and your family. Should you face a loss, it also helps you prepare for the future, allowing you to become more resilient–a trait that we believe everyone should possess.
We understand that the idea of risk management can be confusing. Our goal here at Odell Studner is to make risk management as straightforward as possible for you so that you can focus on other crucial aspects of life. Need help figuring out where to begin? To get started, speak with one of our private risk management advisors today.