Ask an Advisor: Frequently Asked Insurance Questions


Over the years, we have received plenty of questions from current and prospective clients regarding insurance. Therefore, we have compiled a list of the most common questions here.

Specialty Vehicle Insurance

How old does a car have to be in order to be considered a classic car?
What is the best motorcycle insurance for my vintage motorcycle?

Home Insurance

What does home insurance cover?
How do I know if my homeowners policy includes flood insurance?
What are the best insurance policies for large homes?
I have an historic home. What type of homeowners insurance do I need to make sure it is properly covered?
What are the best insurance policies for large homes?
What homeowners insurance policy is best for my vacation home?
What structures are covered by homeowners insurance?
Which homeowners insurance is best for expensive homes?
Do you need extra flood insurance when you live near water?
What type of homeowners insurance is best for a custom home?
Does homeowners insurance cover my pool?
How do you know when you’ve outgrown your homeowners insurance policy?

Jewelry Insurance

How does jewelry insurance work?
How much coverage do I need for jewelry insurance?
What does engagement ring insurance cover?

Boat Insurance

What does boat insurance cover?
What type of boating insurance is best for a yacht?

Private Client Insurance

What is private client insurance?
How do I know if I need private client insurance?
What does a private client insurance policy cover that a standard insurance policy does not?

Umbrella Insurance

What does umbrella insurance cover?
How do you know how much umbrella insurance to get?

Carriers

Do you offer policies with Chubb insurance?

General Insurance Questions

How is replacement cost calculated?
How often should I review my insurance policies?
Why is my replacement cost so high?
Who qualifies for high-net-worth insurance?

How old does a car have to be in order to be considered a classic car?

For insurance purposes, a classic car is 25 years old or older. (Note that other factors also come into play for collectors, who are apt to be a bit more excited about a 1972 Chevrolet Chevelle than a 1972 Ford Pinto.)

I have an historic home. What type of homeowners insurance do I need to make sure it is properly covered?

If you’ve taken pains to restore or maintain a stately Colonial, an elegant Victorian “Painted Lady” or a sleek mid-century modern ranch house, it would surely be important to be able to restore it if it was damaged by wind, water, fire or other events. The best way to do that is with private client homeowners insurance.

Private client insurers understand that period materials and craftsmanship are part of the esthetic integrity of an historic home, and that adherence to specific building practices and design elements add to its value. So if a specific stucco technique is needed to match a damaged wall to the others around it, that is what you can expect a private client policy to pay for. The attitude isn’t “good enough,” rather it’s “let’s make it as good as it was.”

What are the best insurance policies for large homes?

If your home is valued at $750,000 or more, a private client insurance company is your best bet. Among the reasons is this: the private client risk pool is different because they only insure successful individuals. This means that you will be insured with peers who generally respect the value of a dollar and take care of their homes and belongings. So while the amount that a private client insurer pays for a claim may be higher, this is offset by a lower number of claims per customer, which helps to keep premiums down.

Another reason is that private client insurers specialize in valuing high-end homes, cars and property. They have years of experience predicting the type and amount of claims they will receive each year. Companies that offer standard insurance price their policies for a lower-end market. If you want to insure a higher-value home with one of those companies, you can be sure that you will be charged a hefty surcharge, and you may find it difficult to get coverage limits that are high enough to make you whole after a claim, or that will protect your lifestyle in the event of a lawsuit.

What does a private client insurance policy cover that a standard insurance policy does not?

The hope is that you’ll never need to file a homeowners insurance claim. But if you do, private client insurance offers numerous coverages that you won’t find in a standard homeowners policy.

For instance, private client insurers offer guaranteed replacement cost, which means there is no cap on your rebuilding costs if you have a total loss. Compare that to typical insurers, most of which only offer home insurance replacement value up to 120% of the original cost estimate stated on your policy—an amount that may not be enough in an area where construction costs have been driven up by a widespread natural disaster or a building boom.

Here are a few of the other appealing features found in private client insurance policies that are not included with standard policies:

  • Coverage for water backup of sewers and drains, which is often specifically excluded by standard-market insurers
  • Ordinance and law coverage, which pays for the additional costs associated with repairing, replacing or rebuilding in accordance with current building codes and laws
  • Worldwide liability, which covers your personal belongings even outside the United States
  • Higher internal jewelry limits, meaning you could expect to receive a larger payout for expensive jewelry with private client insurance than if you had standard insurance

What homeowners insurance policy is best for my vacation home?

If you’ve put time and money into designing and furnishing a vacation home, it’s an important investment. When you have private client insurance, a regular homeowners policy is all you need to cover it; you’ll pay one premium to insure your place at the beach along with your home in the ‘burbs.

Contrast this with a standard insurance carrier. Those companies will cover your vacation home—but at a price. They often strip down the coverage, so you’ll see a lot of “subject to policy exclusions and conditions” in the paperwork, and you can expect to pay a surcharge, which can be hefty depending on how luxe your vacation home is and where it is located.

If you own a vacation home, private client insurance is the superior choice to provide more comprehensive and detailed coverage for this valuable portion of your portfolio.

What structures are covered by homeowners insurance?

As you would expect, homeowners insurance covers the primary residence on your property. In addition, it covers other structures and home-related fixtures in the immediate vicinity, such as a pool, fencing, lighting and similar features that may not be directly attached to the main structure but are still part of the property.

In some cases, your property may have additional structures, such as a boat house, a guest house or quarters for the workers who maintain your home or ranch. Mass-market insurance companies may require multiple policies for these structures—sometimes even a separate policy for each one. With private client insurance, though, it is possible to cover all of the structures on your estate under one homeowners policy. This can make private client insurance a more attractive option if you have multiple structures on your property.

Which homeowners insurance is best for expensive homes?

Once you start shopping for homeowners insurance for an expensive home, you’ll find that there is really only one choice—private client insurance. And the primary reason is simple: higher coverage amounts.

When you own any home, you have to think beyond the value of the home and its furnishings. While it’s important that those are covered, you also need to consider liability issues. What would happen if you were sued because a dry-cleaning delivery person slipped and fell on your front walk? A standard homeowners policy may offer a medical coverage of up to $500,000 for others who are injured on your property, but jury awards can and do exceed that amount regularly. Even if you bought a separate excess liability policy, standard coverage amounts top out at $1 or $2 million.

With private client insurance, you can buy an excess liability policy that will integrate seamlessly with your homeowners policy and cover you for $20 million, $50 million or even up to $100 million. You can protect your lifestyle, not just your home. This is why private client insurance should be top of mind when you are looking for coverage for your expensive home.

Do you need extra flood insurance when you live near water?

Because it typically takes weeks or months for weather patterns to alter—warming from spring to summer, for example—it’s easy to get lulled into an expectation that weather changes will be gradual. But the truth is that wild or unpredictable weather can occur anywhere on any day.

That means that you could get rain tomorrow. And the next day. And the day after that. Or an unexpected snowmelt. Or a storm surge from a hurricane. Or a typhoon. If you live near water especially, any of those events could cause the water levels near you to rise and cause flooding. So the answer is yes—it is highly recommended that you purchase flood insurance if you live near water. Kelly Klee has policies available through AIG or Chubb for those with homes valued at roughly $750,000 or more, or you can buy flood insurance through FEMA (the Federal Emergency Management Agency).

As you consider your flood-insurance options, be sure to understand this: you are looking for flood insurance, not extra flood insurance. Homeowners policies do not include flood coverage. So if you need it, the only way to protect yourself from flooding is to buy a separate flood insurance policy.

Do you offer policies with Chubb insurance?

Yes, we do. Chubb insurance policies are only offered through an exclusive group of brokers that understand the needs of wealthy individuals and families. Kelly Klee is proud to be one of them and to sell this well-respected company’s high-quality products.

How does jewelry insurance work?

Homeowners policies typically include some coverage for jewelry, although the amount may be quite low—only $2,500 or $5,000. To get more coverage, you will need to take out a collections policy.

If you do, you’ll have two choices: to itemize each piece for its separate value or to insure a group of items for a blanket amount, say $100,000. Either method can make sense; the former method works well when you have high-value items and/or don’t mind contacting your insurance company each time you get a new piece of jewelry. Blanket coverage, on the other hand, allows you flexibility in buying and selling without having to update your list of current jewelry holdings every time they change. In either case, you should keep documentation proving when you purchased or received each jewelry item and what it’s value was at that time.

How much coverage do I need for jewelry insurance?

While there may be a good reason to go a different route, you can use $5,000 as a yardstick. If you have individual jewelry pieces that are worth more than $5,000 each, it generally makes the most sense to itemize each one. If you have multiple pieces that are worth less than $5,000 each, you can add up the total and take out a blanket jewelry policy for the aggregate amount.

If you have any doubt or want to discuss the right coverage levels with an experienced insurance expert, don’t hesitate to contact Kelly Klee at 844.885.1600.

What does boat insurance cover?

Boat insurance covers three main categories:

  • Hull Value (the main body of a boat, yacht or other vessel)
  • Watercraft Liability (bodily injury and/or property damage caused by an accident involving an insured person using their insured property)
  • Engine Value

While standard insurance carriers have limitations, Kelly Klee’s insurers cover boats of all sizes and types, from motorboats to pontoons to catamarans to sailboats to ocean-going mega-yachts.

As you consider your options, keep this in mind: you will have the option to choose an agreed value policy or a market value policy. If you don’t want any surprises, agreed value is a good choice. This will ensure that if your vessel if a complete loss, you won’t end up receiving less than you expected because of depreciation.

What does engagement ring insurance cover?

Generally, engagement ring insurance covers the cost of your ring up to a specified amount. However, be sure to read the fine print—all policies are not the same. Private client insurance policies tend to be more generous. They offer higher coverage limits and do not differentiate between a lost or stolen ring; some mass-market insurers limit coverage to an amount that may not pay for the full cost and will only cover theft. And if your ring is a vintage piece or special in other ways, you’ll want to be sure that the insurance company appraises it for its full unique value, which could be more than just the size of the gemstone and type of band.

With a jewelry insurance collections policy, you can choose to itemize each piece of jewelry that you own or take out a blanket policy covering all of your pieces. If your engagement ring is a high-ticket item, itemizing may be your best bet to ensure complete coverage.

What does home insurance cover?

  • Other structures (like a shed)
  • Personal property (furniture, decorative items, clothing, appliances, electronics, etc.)
  • Additional living expenses (the cost to live elsewhere will your home is being repaired or rebuilt)
  • Liability (if someone is injured on your property)
  • In addition, there are additional coverages within each of these main categories. For example, expensive jewelry will be specifically covered in a particular manner as part of your personal property.

    It is important to note that the homeowners insurance sold by private client insurers offers significantly higher coverage limits and is more comprehensive than that provided by standard carriers. Looking again at jewelry as an example, with a Kelly Klee policy, you can purchase coverage for pairs and sets of expensive items. So if you have a pair of unique gemstone earrings and one is lost, you can opt to match the existing earring with a new one or, if that is not possible or you prefer not to, you can surrender the earring that you still have to the insurance company in exchange for the cash value of both. With a standard carrier (and assuming your jewelry coverage limits are high enough to pay for it), only the lost earring would be reimbursed and you’d be left with a single, unmatched earring.

    This is just one example of the benefits of purchasing a private client homeowners insurance policy. If your home is valued at $750,000 or more and/or your net worth is in excess of $1 million, it’s worth looking into.

    What is private client insurance?

    This is a term that refers to insurance that is geared to meet the needs of those who have reached a level of financial success—typically those who own a home worth at least $750,000 and who have a total net worth of $1 million or more.

    Customers who fit this description are often underserved by mass-market insurance carriers. This may mean that they don’t have access to coverage limits that are high enough to fully protect their assets, or it could be that a particular insurance product isn’t even available, such as insurance for a yacht.

    Private client insurance gives provides higher coverage limits; more extensive, seamless coverages; superior customer service; and, in some cases, lower premiums than can be found with standard carriers. (This is because private client insurers are selective about the clients they choose to insure, and they understand that risk pool well. By being better able to predict the type and amount of claims they are likely to pay, they can more accurately price premiums.)

    All in all, if you are a successful individual, private client insurance is well worth checking out.


    h3>What is the best motorcycle insurance for my vintage motorcycle?

    Ah…the feel of wind in your hair, the smell of the great outdoors, the sound of RPMs revving—motorcycles are a lot of fun. They are also easily damaged. Why not add in the peace of mind of knowing that you’re fully covered as you snake down the road on your bike?

    The value of vintage motorcycles can vary widely depending on their condition, how well they have been maintained and their rarity. For instance, take the 1946 Vespa that was listed for $279,000 in 2017. This is three times as much as a 1947 model offered by the same Italian dealer simply because 1946 was Vespa’s first production year.

    Private client insurance companies get that difference. Any of Kelly Klee’s carriers will ensure that the current value of your vintage motorcycle is maintained during a total loss. This is a level of policy customization that makes private client insurance the best choice for vintage-motorcycle owners.

    What type of boating insurance is best for a yacht?

    Two high-quality insurance companies have dedicated yachting departments: AIG and Chubb. Their experience and expertise in insuring these large investments make them a superior choice for yacht and mega-yacht owners.

    Here is a sampling of the features available for purchase with a yacht policy:

    • Agreed Value Option – pays the value that you’ve agreed on with the insurance company ahead of time if your vessel is a total loss
    • Property Coverage – pays for items damaged or destroyed on board a vessel, including tenders, fine art, personal property and furnishings
    • Liability Protection – can be customized to meet your needs and may include legal defense costs, pollution clean up and containment, marine environmental damage and wreck removal
    • Emergency Towing & Assistance – pays for assistance in the event your vessel is disabled
    • Hurricane Haul-Out – reimburses costs incurred to move and store a vessel in order to keep it from being damaged by a named storm
    • Longshore and Harbor Workers’ Compensation Act (LHCWA) – covers those employed aboard a vessel who are within the jurisdiction of the LHCWA

    Additional features range from a hull deductible waiver to liability coverage for captain and crew to the ability to add a marina as an Additional Insured, among others. The specific choices you make will determine your total yacht insurance cost.

    How is replacement cost calculated?

    Insurance companies are masters at analyzing data. They’ve gotten really good at crunching numbers and predicting outcomes because that’s how they stay in business. So part of your homeowners insurance replacement cost is determined by feedback from your insurance carrier. Do you live in a natural-disaster prone region? What are construction costs like in your area? What about your particular neighborhood…is it an especially low-lying area that is prone to sudden freezes?

    Replacement cost is also affected by the facts provided by your county assessor. How many square feet is your home? What other structures are on your property? What does the assessor say your property is worth?

    Some of the most important data comes from you. Only in rare cases would an insurance agent complete a top-to-bottom, in-person assessment of your home. This is why you’ll be asked questions about the type of materials used to construct your home (such as wood framing vs. brick, asphalt shingles vs. clay tiles) and the finishes inside. It’s important that all of this information is correctly noted so that if you do have a claim, your homeowners insurance will pay enough to restore your home to the same standard to which you are accustomed.

    How often should I review my insurance policies?

    At a minimum, you should review your insurance policies once a year. Most people do this at renewal time, but it could make sense to do it sooner or more frequently. For instance, if you recently completed a renovation or remodeling project, the value of your home may have changed—sometimes a lot. If you just shelled out a fair amount for a new designer kitchen, it would behoove you to make sure that it’s fully covered, even if that means your rate increases a bit.

    In other cases, you may find that you have become eligible for greater savings. Maybe you have a child covered on your auto policy who has reached a milestone birthday or improved their grades while away at college. Or you’ve sold a boat, put your convertible in storage for the winter or given up golf and no longer own a golf cart. Your premium could decrease as a result.

    Anytime you have a life change is a good time to review your insurance policies. This will ensure that you are covered to the extent that you should be and are only paying for what you need.

    Why is my replacement cost so high?

    There’s no doubt that replacement-cost estimates can create sticker shock. But my home is only 10 years old, you think. How could it cost so much more to replace it now?

    There are three reasons. First, the new-home construction market has been going strong in many areas of the country, which means that material and labor costs continue to hold steady. Looking forward, this is likely to continue for some time. Lender Fannie Mae’s May 2017 forecast calls for housing starts to continue at the same rate in 2017 and even increase a bit in 2018.

    Another factor that affects replacement cost is quality. A good homeowners insurance policy will ensure that any repairs or replacements are done to the same standard as your original finishes. So you won’t get Formica instead of marble or pine cupboards instead of cherry. Fine craftsmanship also has a price.

    Replacement cost also takes into account the speed at which you’ll expect any work on your home to be done. When you’re building a new house, you still have somewhere else to call home. But when it’s your current home that is being rebuilt, you want to get back into it as soon as possible. Sometimes that means paying a premium to get the work done sooner rather than later.

    How do I know if my homeowners policy includes flood insurance?

    It doesn’t. This is because there are no homeowners insurance policies in the market that automatically include flood insurance. Most homeowners must purchase this coverage through FEMA (the Federal Emergency Management Agency).

    For individuals with homes valued at $750,000 or more, you have additional options. There are two private client insurance companies that sell excellent flood insurance: AIG and Chubb. If you’d like to learn more about their offerings or get a quote, contact Kelly Klee at 844.885.1600.

    How do you know how much umbrella insurance to get?

    Before you make this decision, you should know that there is no dollar limit on personal liability lawsuits. So you could be sued for just a few thousand dollars, hundreds of millions of dollars. or any amount in between. Can you afford to lose hundreds of millions of dollars?

    Few of us expect to be the target of a liability lawsuit, particularly if we try to treat others decently, and yet every day good people are sued. Sometimes the cases are frivolous and filed by those who see a person with assets as a source of easy money. Other times, you may find yourself in a situation where you accidentally caused harm to someone or did not fully ensure their safety when they were on your property or using your vehicle or other object that you own.

    This means that at a minimum, it’s a good idea to insure yourself for an amount equivalent to your net worth.

    Whether a suit has merit or not, being involved in a lawsuit can be an unpleasant experience. Knowing that your assets will be protected can lessen the stress and make a difficult time more tolerable.

    What type of homeowners insurance is best for a custom home?

    Custom homes attract a certain type of homebuyer, one who is particular about their surroundings and savors fine craftsmanship. If this is you, then you should strongly consider private client insurance to protect your investment.

    With a private client homeowners policy, you can be sure that it will cover all of the unique elements and quality finishes that were part of the home’s original design. This stands in contrast to mass-market insurers. They may offer a premium for an upgraded kitchen, but they won’t necessarily differentiate between crema marfil marble and calacatta marble, which is more expensive.

    The bottom line is that you if you chose a custom home, you will find better coverage when you choose the type of customizable homeowners policy that is available with private client insurance.

    Does homeowners insurance cover my pool?

    The short answer is yes—a pool will be covered under “Other Structures Coverage.” But it’s important for pool owners to pay extra attention to their liability coverage limits.

    Having a pool often means inviting family and friends to your home to enjoy it with you. Those fun gatherings have the potential to come at a high price. When you combine more traffic on your property with slippery surfaces and good-natured roughhousing, you get increased opportunities for falls and accidental injuries.

    It is important that you have enough liability coverage to protect you in the event that you are a respondent to a lawsuit. You may never expect a friend or family member to sue you, but it happens all the time. So assess how much you need to protect your net worth. If the maximum liability offered with your homeowners coverage isn’t high enough, an excess liability policy can fill in the gap. This will ensure that you can enjoy your pool time with an easy mind.

    How do you know when you’ve outgrown your homeowners insurance policy?

    First, if you’re asking this question…congratulations! You probably wouldn’t be wondering unless you were considering purchasing a more expensive home or had already done so.

    There are two thresholds that may be good indicators of when you should shop for new homeowners insurance:

    • If your home is valued at $750,000 or more; and/or
    • If your net worth is in excess of $1 million

    The reason these numbers are important is because mass-market insurers limit how much coverage they will allow you to purchase. Remember that your insurance needs to be enough to pay for more than just your home’s structure—you also need enough coverage to replace any other structures on your property, the possessions inside your home and the cost of living expenses you may incur if your home is being repaired or rebuilt.

    In addition, you should consider how much liability coverage you would need if someone were injured on your property. A typical homeowners policy limits liability coverage to $300,000. If your net worth is $1 million or more, that amount would leave you largely unprotected in the event of a lawsuit.

    Who qualifies for high-net-worth insurance?

    At Kelly Klee, our rule of thumb is that you have a home worth $750,000 or more and/or a minimum net worth of $1 million. That said, there are always exceptions to the rule. (If you’re reading this from your sailboat in the Bahamas, you may be one of them.)

    If you think you may be a candidate for private client insurance—the term the industry uses for those with a high net worth—please give us a call at 844.885.1600 or contact us here.

    How do I know if I need private client insurance?

    If you need insurance and live in a home valued at more than $750,000 or have a net worth greater than $1 million, you likely qualify for private client insurance.

    Whether you need it or not is a slightly different question that only you can answer. Here are some reasons the answer might be yes:

    • Your net worth is more than the maximum amount of liability insurance that you can purchase from a standard insurance carrier
    • You need coverage for big-ticket items or vehicles
    • You need coverage for unique or hard-to-value property, such as an historic home or a vintage car
    • You’d prefer to have an experienced insurance expert advising you rather than a call-center employee
    • You don’t want to deal with any hassles if you have an insurance claim

    Still not sure? It’s easy to have a conversation with Kelly Klee. We won’t pressure you in any way, and if private client insurance isn’t the right fit, we’ll suggest other resources to meet your needs. Our goal isn’t just to sell insurance, it’s to sell the right insurance to meet our customers’ needs. Give us a call at 844.885.1600, or contact us here.

    What does umbrella insurance cover?

    Umbrella insurance is an additional coverage that protects you and your family members against claims of personal injury, bodily injury and property damage for which you or a family member are negligent. Also known as excess liability insurance, it is coverage above and beyond the primary liability limits that are included with a homeowners policy.

    There are five elements that are used to determine negligence in a court of law:
    Duty—Does a defendant owe a duty to the plaintiff? (I.e., should you have installed no-slip treads on your diving board?)
    Breach of Duty (Did you neglect to install those treads?)
    Cause in Fact (Did the fact that you neglected to install the treads make it possible for the plaintiff to be injured?)
    Proximate Cause (Was the fact that you didn’t install the treads the reason that the plaintiff has a claim? In other words, if a plaintiff uses your tread-less diving board one day with no problem but is injured three days later while playing basketball, they would have a hard time proving that your diving board caused their injury.)
    Damages (Did the plaintiff incur monetary or other damages as a result of their interaction with your diving board?)

    Notice that there is no mention of recklessness or an intentional disregard for doing the right thing. Conscientious, caring people can be found criminally negligent, too. For this reason, purchasing an umbrella insurance policy is a smart move for anyone with significant assets to protect.

    What are the best insurance policies for large homes?

    If your home is valued at $750,000 or more, a private client insurance company is your best bet. Among the reasons is this: the private client risk pool is different because they only insure successful individuals. This means that you will be insured with peers who generally respect the value of a dollar and take care of their homes and belongings. So while the amount that a private client insurer pays for a claim may be higher, this is offset by a lower number of claims per customer, which helps to keep premiums down.

    Another reason is that private client insurers specialize in valuing high-end homes, cars and property. They have years of experience predicting the type and amount of claims they will receive each year. Companies that offer standard insurance price their policies for a lower-end market. If you want to insure a higher-value home with one of those companies, you can be sure that you will be charged a hefty surcharge, and you may find it difficult to get coverage limits that are high enough to make you whole after a claim, or that will protect your lifestyle in the event of a lawsuit.

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