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The Challenge To Insure Lavish Homes
Not all insurers are on board with your client ’ s desire for expensive homes in desirable locales . By Jennifer Lea Reed
FOR YEARS , AFFLUENT FAMILIES HAVE BEEN DEALing with the same rising cost of insurance as everyone else . But now a new risk is emerging — many fear they won ’ t be able to get insurance at all . At least that was the sentiment expressed in a recent survey by HUB International .
The global insurance and financial services firm recently polled 150 high-net-worth and ultra-high-net-worth individuals — as well as 50 advisors — asking them about their risk tolerance and insurance coverage . The study , conducted before the latest Los Angeles wildfires , found that 69 % of respondents faced challenges securing sufficient property insurance in the last year .
That ’ s an issue in certain states — California , Florida , Texas and Colorado — that are popular among those who live grandly and have seen more than their share of fires , floods , tornadoes and hurricanes in the last few years . Which means property owners in those states might find insurance companies resistant to underwriting their home assets .
Katherine Frattarola , the head of HUB ’ s private client group , works with families who are building their dream home after a big liquidity event or access to a trust . She says the insurance issue could become a thorny one for people looking to buy or build houses .
“ Some of the things that may seem at first blush minor to a new homeowner could be very detrimental when you think about the underwriting process ,” she says . For example , take a client who wants to build a home in Aspen . “ No insurance carrier today wants to insure a home that ’ s surrounded by forest and that has a cedar shake roof .”
Same for a cute bungalow on a barrier island off the coast of Florida — since , after all , barrier islands are meant to take the brunt of a storm surge . “ So while the bungalow may look beautiful and may be enticing as a winter getaway for a family with small children , it ’ s also very hard and very expensive to insure ,” she says .
How expensive ? Frattarola knows of one client on the very high end who lives in a $ 100 million home in Florida , and he
52 | FINANCIAL ADVISOR MAGAZINE | JANUARY / FEBRUARY 2025 WWW . FA-MAG . COM