From Bruce Springsteen’s vocal cords to David Beckham’s legs, the insurance of celebrity body parts is widely known. But beyond their primary means of income, high-net-worth and celebrity clients have assets and exposures that make them uniquely vulnerable to financial loss.
These blind spots have the potential to be devastating if the right insurance policies and risk management measures are not put into place.
Here are some of the liabilities that may be commonly overlooked by your celebrity and high-net-worth clientele:
Sponsorships And Endorsements
While they are a revenue source for many celebrities, sponsorships, endorsements and other affiliations come at a price. From a product recall to a class action lawsuit filed from injury at an event, lawsuits and claims often follow those with the deepest pockets and the best-known names.
A combination of insurance policies (such as a general liability or tailored umbrella policy) and risk management (including contract language) can help mitigate liability and avoid costly claims.
Business Ventures And Entrepreneurship
Wealth and celebrity open doors of opportunity, allowing your client to pursue additional passions, such as baking or owning a private vineyard. However, business ventures also bring their own unique set of risks, and they can sometimes be difficult to insure.
With any new endeavor, the likelihood, as well as the severity of loss, must be considered. For example, endorsing a risky new product could result in short-term claims. Conversely, a well-established product might be “safer” in the short term, but events such as class-action lawsuits could mean a long-term, and potentially more devastating risk.
Find a partner experienced in assessing risks in whatever market you are considering—and who can write niche insurance policies—to ensure that your client’s business interests remain profitable.
Board Membership And Advising
Many high-net-worth individuals use their wealth to support philanthropic efforts or advise on a board as an officer or director. If your client participates in a board of directors for a public, private or nonprofit organization, high-limit directors and officers liability should be put into place to protect them.
Hobbies, Possessions And Experiences
Expensive cars, beachfront vacation homes, private jets and priceless art bring with them more responsibility. Make sure your client’s assets are documented and properly insured.
Also be mindful of experiences and travel. If an accident were to occur when on tour, on a private jet or while surfing with friends in Hawaii, your client could be held liable. The proper precautions and policies can help reduce losses.
Employees
Employees are possibly the most risky, and the most overlooked, aspect of celebrity and high-net-worth risk management. Personal assistants, drivers, nannies, household employees and cleaning staff must all be properly vetted and insured. This includes legally required policies such as workers’ compensation and other insurance best practices, including employer’s liability and employment practices liability.
Parker Beauchamp is the CEO of Inguard, an insurance firm that specializes in serving clients with complex risk management needs.
