Five Insurance Gaps To Close

When you’ve worked hard to build real wealth, the last thing you want is an unexpected event undermining years of progress because of overlooked insurance details. Yet this can happen — not because people are careless, but because insurance is easy to postpone. Easy to assume is “fine.” Easy to plan to review later.

But small blind spots may lead to meaningful vulnerabilities. Think liability exposure, underinsured property, or outdated life insurance — risks that may create significant financial consequences if not addressed.

Here are five thoughtful, actionable steps that may help reduce gaps and strengthen your overall protection:

1. Strengthen your liability coverage

Most homeowners and auto policies include liability protection, but the limits are often lower than what many high-asset households may need.

For example, if someone sues you after an accident and the settlement exceeds your policy limits, the remaining amount generally becomes your responsibility — potentially impacting savings, investments, or even home equity.

What to consider now:

• Review liability limits on your home/renters and auto policies.
• If coverage is in the $100,000–$300,000 range, it may be insufficient for households with substantial assets.
• Consider whether an umbrella policy may help provide additional protection at a relatively modest premium, depending on your situation.

Hypothetical example:
A guest slips on your property and sues for $1.5M. If your policy covers $300,000, you could be responsible for the remaining amount. An umbrella policy may help cover the gap, depending on the claim and policy terms.

2. Protect high-value items with scheduled coverage

Standard homeowners policies often cap coverage for items like jewelry, fine art, luxury goods, or collectibles at levels below their actual value. This may leave you exposed without realizing it.

What to consider now:

• Make a list of high-value personal belongings.
• Add “scheduled personal property” riders to insure each item for its appraised value.
• Revisit values annually, as they may change over time.

Hypothetical example:
Your $25,000 engagement ring goes missing, but your policy caps jewelry coverage at $5,000. Without a rider, you could absorb the difference. Scheduling the item may help provide coverage up to the insured value, subject to policy terms.

3. Update your life insurance as your wealth grows

Life changes — and your insurance should keep pace. If your income, responsibilities, assets, or family structure have changed, older coverage may no longer reflect your needs.

What to consider now:

• Review your existing coverage compared to your current lifestyle and obligations.
• Assess needs such as mortgage balances, income replacement, education costs, and long-term goals.
• If you rely solely on employer-provided life insurance, consider whether an individual policy may offer greater flexibility and portability.

Hypothetical example:
If your salary has increased significantly and you’ve purchased a larger home, but your life insurance hasn’t changed since 2018, you may have a meaningful coverage gap.

4. Plan for long-term care before you need it

Long-term care is a significant financial risk area for many high-net-worth households. Medicare and most health insurance policies do not cover the majority of long-term care expenses — such as in-home support, assisted living, memory care, or nursing facilities — which can exceed $100,000 per year.

What to consider now:

• Explore long-term care (LTC) insurance options if self-funding is not feasible.
• Earlier applications may offer better pricing and smoother medical underwriting.
• Consider hybrid life/LTC policies for additional flexibility.

Without LTC coverage, some households may need to liquidate investments or draw on retirement assets sooner than planned.

5. Conduct a full insurance review (you may need one)

Life evolves quickly — new real estate, travel patterns, professional shifts, inheritances, and family changes can all affect your insurance needs. Without periodic review, gaps may develop unexpectedly.

What to consider now:

• Conduct an annual insurance review with a qualified advisor or insurance professional.
• Evaluate property, liability, life, disability, and any specialty coverage.
• Confirm that new assets — vacation homes, rentals, valuables — are appropriately listed and insured.

Hypothetical example:
If you purchased a second home but did not add a policy, a storm, fire, or flood could result in significant out-of-pocket costs.

Protect your wealth proactively — before a crisis forces the issue

Insurance may not feel like the most exciting part of wealth-building, but it might be one of the most effective ways to potentially help safeguard what you’ve worked hard to create.

Closing coverage gaps now may offer:

• greater protection
• fewer surprises
• increased peace of mind
• a financial plan that can better withstand stress

You don’t need to wait for something to go wrong to discover what was missing. Consider partnering with a financial advisor or insurance professional to help review your policies, update what may be outdated, and strengthen your overall protection strategy.

About the author: Katy McDonald, CFP®, is a Lead Advisor at Brighton Jones. She helps high-income professionals and families design tax-efficient investment strategies and retirement plans aligned with their values and long-term goals.

Brighton Jones LLC is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. This material is for informational purposes only and is not intended as tax, legal, or investment advice. All insurance coverage is subject to the terms of the policy and carrier approval. All investing involves risk, including possible loss of principal. Please consult a qualified professional regarding your personal circumstances.