One of the perks of being wealthy is the ability to follow passionate impulses to collect wine, art, watches or whatever else tickles the fancy.
But when ultra-high net worth individuals scratch the itch for luxury goods, the costs can go well beyond the sticker price. Besides insuring the value of the luxury objects, liability protection must often be purchased.
“I always marvel at the time put into identifying what [ultra-high net worth individuals] want to acquire but not into protecting themselves,” said Gary Raphael, senior vice president of risk consulting for ACE Private Risk Services.
Some of the items on our list of must-have luxury goods certainly come with a liability quotient. Consider the hot tub boat and the potential for a range of nautical disasters.
“Most people don’t get in a hot tub for mind clarity,” said David Spencer, senior vice president for premier client services for ACE Private Risk Services.
“Everyone knows how much to insure an item for” if it were to be destroyed, he said, but too many don’t think about liability insurance. And considering the sticker price of such coverage, it’s a major oversight.
It only costs “several hundred dollars per year for $5 million of liability insurance” to protect family assets in the event of an accident, Spencer said.
But liability is not the only area in which luxury-goods buyers fall short. Raphael noted that research showed that 40% of collectors don’t insure some of their items, and that a third don’t update their policies every year as recommended to ensure that increases in value are covered.
One reason for insuring only parts of a collection is the emotional connection to some items.
“When they are passionate about it, they focus on things they love,” Spencer said.
Another reason is that collectors mistakenly believe items like antique furniture or high-end jewelry are covered under a homeowner’s policy. Unfortunately, that coverage might not be enough. High-value items should be insured separately.
Spencer notes that specialty insurers like ACE and its competitors offer services aimed at the UNHW crowd. Those insurers offer teams that do on-site evaluations of items to ensure they are properly insured.
With Spencer’s comment that “people get to decide what [they] purchase” in mind, check out 10 Luxury Items the Super Wealthy Must Have. The items and accompanying photos are courtesy of americanluxurymag.com.
1. Aston Martin DB9 Volante
Car buffs like to talk about torque and horsepower when they compare driving machines. With this one-of-a-kind Aston Martin, which was auctioned off for charity this month, you can take the cowboy theme farther with its equestrian themed interior. There’s no word on how much the car went for, but an off-the-lot DB9 goes for about $200,000.
2. Designer Surfboard
If driving an Aston Martin to the beach isn’t enough showing off, there’s always this surfboard designed by Roy Stuart that has a price tag of a cool $1.3 million. Handmade with Paulownia wood and crafted to make turning and riding the waves as smooth as possible, the board is covered in 23-karat gold. Cowabunga, indeed!
3. Putin iPhone 5s
If your friends and colleagues aren’t quite sure who is really in charge, this designer iPhone should give them a heads up. Boasting a drawing of the Russian strongman and covered in gold, the Italian company Caviar is asking $4,340 for the mobile device.