The disconnect between asset structure and insurance coverage for high-net-worth (HNW) individuals is more common than you think.

True claims story: All five luxury properties of a single homeowner were placed in an LLC to contain liability and protect individual assets. From a legal perspective, it was a smart move and a commonly recommended strategy to limit liability. But when an insurance claim was filed on one of the properties, it was denied — not because the loss wasn’t a covered peril, but because the LLC wasn’t listed on the insurance policy. 
Despite being legally owned and operated through the entity, the home with the claim was still insured as if it belonged to the individual. It was protected on paper, but not in practice.

Many insureds assume that having one comprehensive umbrella policy covers their entire real estate portfolio. But unless each LLC, trust and legal entity is listed on the insurance policy, they aren’t. A “catch-all” policy is only as strong as the list of named insureds it includes.

These gaps aren’t rare. Some 77% of Americans with more than $1 million in household net worth have an estate plan, will or trust.[1]  And while many of these structures are created in consultation with estate planners or attorneys, they are rarely communicated to insurance professionals. That’s a multimillion-dollar oversight.

Best Practices for Insurance Brokers, HNW Families and Wealth Advisors
Many coverage issues are avoidable, but only with transparency and proactive coordination between legal, financial and insurance best practices. Brokers, HNW clients, estate planners and wealth advisors should collaborate as early as possible during the estate-planning process. Here’s where to begin:

• Disclose ownership structures clearly. Inform your broker how each property or asset is titled. Every trust, LLC or other legal entity should be named on all relevant policies.
• Conduct a comprehensive risk audit. Review exposures across real estate, vehicles, watercraft, fine art and other collectibles. Consider who owns each asset, not just who uses it.
• Rethink and update your liability limits. As your wealth and assets grow, your coverage should also grow in pace. Too often, umbrella policies remain static even after major acquisitions. Ensure that your limits and policy language accurately reflect your current ownership exposure, particularly if your real estate holdings exceed $ 10 million.
• Involve your estate planner. Align titling strategies with your insurance program. Estate attorneys often structure legal protections that aren’t shared with insurance advisors. Closing that loop is critical.
• Embrace layered protection. A single large policy isn’t always best. Layering multiple policies across entities can offer more flexibility for coverage in the event of a claim.
• Mitigate risk before it becomes a liability. Whether it’s installing a fence around a pool or maintaining your properties, proactive risk management reduces the likelihood of claims.
• Don’t forget the less-obvious risks. Defamation, cyberbullying, dog bites and other personal liability exposures are increasing, especially with social media in the mix. Comprehensive policies should cover these threats.

When Good Intentions Go Wrong
For HNW individuals and families, liability protection has always been essential, but the stakes are even higher today. “Nuclear verdicts” — jury awards exceeding $10 million — are reshaping the litigation landscape. That’s especially true in historically high-payout states like California, Florida, New York and Texas, although exposure risks aren’t limited to their courtrooms.

In many cases, the perceived wealth of the defendant influences both the scope of the claim and the size of the settlement. Personal umbrella policies, which had previously been considered a safety net, may no longer be enough.

Ultimately, the best protection lies in how you structure and insure your wealth. When trusts and LLCs are created but not accounted for in your insurance policies, you risk leaving major assets exposed. That’s why ongoing communication between you, your insurance advisor and your estate planning team is so important. 

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[1] Vanilla “50 Estate Planning Statistics and Facts You Need to Know,” July 26, 2024.