How Weather Affects Your Wealthy Clients

A case in point is catastrophic hurricanes, a frequent cause of major insured property losses from Texas to Florida to Maine. Over the past three and a half years, hurricane frequency and severity have been low. Last year’s winter storm losses in the Northeast more than made up for the quiet hurricane season, however. Total insured losses were $3.2 billion, while overall economic losses were $4.3 billion, according to insurance-industry sources.

On the other side of the nation, severe droughts took a financial toll on regional farmers and municipalities, and resulted in a fierce fire season. The Sacramento Bee reported that Northern California’s Valley and Butte wildfires in September displaced more than 20,000 people and caused over $2 billion in damages, and about $800 million in damages not covered by insurance.

To understand and address these financial exposures requires specialized assistance from insurance agents like Erdmann, who can provide clients with superior insurance protection and counsel.

The Views Are Awesome

While these various concerns confront all homeowners, they grow in scope with regard to the homes of the wealthy. Affluent people tend to build pricey homes in places that are more prone to weather-related disasters — along coastlines with a higher risk of major storms and rising seawater levels, and in wooded mountains everywhere.

The latter is particularly problematic in the West, due to the region’s extended drought conditions. “Someone with a multimillion dollar home surrounded by trees and shrubs needs to insure it with a carrier that will help prevent a loss. For example, these carriers provide access to wildfire protection services that help homeowners mitigate risk if their area is threatened by a wildfire,” said Erdmann. “If you haven’t been getting this service or the right advice on how to prepare for different weather risks, you’re with the wrong carrier.”

Having a specialized insurance carrier is important, but so is having an agent like Erdmann who will sit down with clients and lay out their susceptibility to natural disaster losses, offering input on how to reduce these risks, and providing access to the appropriate insurance carriers with the knowledge and appetite to absorb these exposures. In the case of ice damming, once the snow starts, it may be too late, but there are preventive measures that can be taken prior to a loss, such as making sure your attic is sufficiently insulated and appropriately ventilated. In addition, there are several commercially available products that can be installed to further protect a home from ice dam problems such as ice melt roof systems or roof heat cables.

Unfortunately, too many people learn this importance too late. Erdmann recalled, “Last winter, a long-standing client had to leave their home for the entire summer because of terrible mold conditions throughout their house after the winter snowstorms. They were grateful that they had the right insurance program, which included mold remediation coverage, to help cover their losses.”

On the bright side, so far it doesn’t look likely that Boston will experience a repeat of last year’s winter snowstorms (fingers crossed). “On Christmas Day, it was 65 degrees here,” said Erdmann. “There weren’t two flakes of snow to rub together. Not that anyone has forgotten just how bad things can quickly become.”

Case in point, in late January, Mother Nature brought a blizzard to much of the East Coast, leaving a heavy blanket of snow behind her and proving once again that she is often unpredictable.

— Check out “Think Robos Don’t Appeal to the Wealthy? Think Again” on ThinkAdvisor.