One size does not fit all when it comes to homeowners and personal insurance programs, especially when it comes to high-net-worth clients who need a broad, varied range of coverage. With recent flooding, wildfires, and earthquakes fresh on everyone’s mind, now is a good time to ensure your policy is up to date and has you covered, no matter where you hang your hat.
Specializing in all-encompassing insurance programs tailored for the high end of the market is The Paragin Group, where Partner Eric Dreisen tells us he and his team of advisors continuously see people neglecting to update their policy on a regular basis and paying too much for insufficient coverage.
“As a real estate firm, part of The Agency's full-service approach is to work with companies that offer our clients a level of service much like our own, as far as the personalized attention clients will receive,” says Mauricio Umansky, Founder and CEO of The Agency. “The Paragin Group goes above and beyond the industry norm to offer highly personalized, concierge-style service and ensure our clients’ homes and investments are protected and will remain so for the long-term.”
We sat down with Eric to ask what steps you can take to ensure your home, likely your most valuable asset, and your belongings are sufficiently covered.
What are some of the biggest mistakes people make when purchasing homeowner and personal insurance programs?
I think the first thing people need to understand is that not every insurance carrier is cut from the same cloth. The specialized, high-net-worth carriers gear their programs more toward the needs of high-net-worth individuals, who are buying homes worth anywhere from five to upwards of 100 million dollars. The features within this kind of policy are designed for this highly specific clientele, where the main street carriers don’t have the ability to accommodate them. We typically find in our initial reviews that a vast majority of our clients are with some of these main street carriers, which are great for people with homes with a $750,000 replacement cost value or below. But it shocks us when we see $5 million and up homes without the proper specialized coverage.
Also, I think people don’t regularly take the time to review or add coverages for new purchases and contents in their homes. Years go by, and they’ve never added a thing to their policy. The same thing goes for excess liability and umbrella coverage. People’s lives get busy, and suddenly, they’re worth a lot more than they were a few years ago. Yet, they’ve never increased their liability coverage and will have a real issue should something happen.
In light of recent events, what advice would you offer homeowners and investors—no matter where they live—to ensure they have quality coverage?
Recent natural disasters serve as a reminder to review your policy and make sure you are totally protected and not vulnerable to any gaps in coverage. When it comes to personal insurance, people typically set it and forget it. Our clients’ lives are ever-changing; they’re doing sophisticated estate planning, purchasing jewelry and fine art. To avoid gaps in coverage, we do annualized reviews to check in with our clients and see what’s changed, adjusting their plans accordingly. It also gives us a chance to weigh the marketplace, ensure their policy is truly tailored to their needs and see if there is an alternative market that will provide them broader coverage at a reduced rate.
Many people don’t realize their home’s market value is not what should dictate their coverage. Can you explain what is of utmost importance?
Their policy should be dictated by the replacement cost of their home and belongings, versus the market value. Location plays a huge role in this, as with everything else. It’s different here in California than in other parts of the country. You can buy a home for $20 million in Beverly Hills, but the actual value of the 6,000-square-foot home—the replacement cost of the structure—may be only $6 million. In this instance, the land is worth more than the structure. In some geographies, such as in the Midwest, the reverse happens. A buyer builds a 10,000-square-foot home with a market value of $6 million, but the replacement cost to recreate it may actually be $8 million. The replacement cost of the home always takes precedence.
Not everyone fully grasps the wide scope of what can be covered in a personal insurance program, beyond insuring their homes. Tell us a bit about what else you can secure coverage for?
Most people think of their personal insurance programs as just covering the home, but we’re looking at programs that cover excess liability, flood, and personal possessions, such as fine art, collector cars, jewelry, musical instruments, and wine collections. (No, wine can’t be insured against consumption, only breakage. Yes, we’ve been asked.) We have carriers that we can get creative with, which allows us to save our clients tremendous amounts of money on truly comprehensive insurance programs.
The Paragin Group’s signature offering is “concierge-style” service. Can you elaborate a bit on what that entails for your clients?
We understand our clients lead extremely busy lives, between work and family life. They require a high level of service to take the hassle and complexity out of the insurance process. Our methods are highly personal, and we don’t separate sales and service. We have an in-house claims advocacy team that helps facilitate issues and claims, dealing directly with the insurance companies on behalf of our clients. And we don’t represent any one insurer. We sit on the same table as our clients and represent their interests, amplifying their voice with the insurance carriers.