One way to keep clients’ portfolios sound and healthy is by checking their insurance coverage, and making sure that they’re protected against catastrophic lawsuits or liabilities that could end up leaving them penniless. Even such mundane areas as car insurance can leave major holes in coverage, if not periodically reviewed.
Yet if you have same-sex or unmarried couples as clients, there’s a chance that, even if you review their policies regularly, you may be costing them money and protection. According to Tim Schaefer, of Schaefer Insurance Services in Germantown, Maryland, few planners review clients’ policies in light of a “spousal situation.” This can mean that clients are overpaying to have dual car insurance policies that nonetheless can leave one another uncovered if they drive each other’s cars; their homeowner’s insurance may not cover damage to one partner’s furnishings; or umbrella policies may have holes in coverage large enough to drive a Hummer through.
Joshua Hatfield Smith, a planner with SPC Financial Services in Rockville, Maryland, addressed these issues recently at the PridePlanners Conference in Washington, and actively advocates the review of client insurance coverage with an eye toward risk management for unmarried couples. There are many different ways, he says, that risk can manifest itself in a couple’s coverage, starting with car insurance. To begin with, having two policies costs more. But it goes beyond that.
For instance, in the case of a couple with a significant age difference, “what people will do,” he says, “is list the older as the insured driver because it’s cheaper. The second person is then a listed driver.” This can cause problems even when renting a car, he points out, because “if you’re a listed driver, you’re listed to drive the primary automobile, but not beyond that.” Taking it a step further, he adds that if they have two separate policies, they may not “have the right types or enough coverage.”