A guide to protecting your luxury wardrobe collections

A recent Sotheby’s auction was billed as the “Visionary Collection of Joseph Lau,” but it wasn’t the businessman’s art or fine wine – rather, it was 76 luxury handbags. This phenomenal collection included six rare Birkin’s and a bronze Kelly bag that fetched more than $3 million. Other record-breaking sales such as Air Jordans and feted couture exhibits, are just a few examples of the rising passion and interest of luxury wardrobes. Whether you are purchasing such collectibles as an investment, to pass down to future generations, or to wear now, we want to make sure each piece continues to be only a source of pleasure for you. Our guidance below will help keep your cherished collectibles in mint condition and ensure they are properly protected in the event of damage or destruction. Navigating the acquisition process With the luxury market soaring, sadly, fakes are too, especially in the sneaker and luxury handbag categories. The New York Times recently reported on the increasing number of “superfakes”—knockoffs so convincing even the best-trained eye can’t always tell the difference. Being aware of this counterfeit market is important for a variety of reasons, not least because most policies do not protect against fraudulent purchases. Therefore, if you are buying from someone other than an authorized dealer, you’ll want to take the following precautions: Research the seller, including reviews and feedback scores of previous buyers. Beware of discounts; if the item or deal seems too good to be true, it likely is. Educate yourself about the product, so you can confirm relevant details and spot potential issues, such as flaws in stitching and embroidery. Storing your collection safely Humidity, leaks, and harmful cleaning products are just a few of the many perils lurking when your collectibles are displayed or stored away. Therefore, we recommend the following safekeeping best practices: Keep everything in a climate-controlled environment—the industry standard is 70℉, 50% humidity—to prevent damage to leather and fabric goods. Similarly, your closet should not be exposed to direct sunlight or heat sources. Keep unworn sneakers in roomy boxes, to make sure they maintain their shape. Most experts recommend clear plastic since they are stronger than the original box. Empty handbags of everyday items and help keep their shape by stuffing with archival fillers like a purse pillow or acid-free paper. Wrap exposed hardware in a lint-free cloth and remove detachable straps. Store bags and straps in their own breathable, neutral-colored dust bag or the original box. Store hanging garments on non-wire hangers in breathable bags made of muslin or polypropylene. Also, place acid-free paper between folded clothing items, particularly knits and lace shirts.Consider professional storage spaces that cater to owners of couture collections, their sole focus is to properly store and transport clothing, shoes, and accessories. Precautions for wearing collectibles In the event you have that perfect occasion to showcase your couture or cherished accessory, you should consider the following precautions beforehand: Refrain from using oily, alcohol- or perfume-based products on your skin, because contact with them could cause damage to the collectible. Be mindful when eating and drinking, especially staining hazards like red wines. Choose carefully what you place in your handbag and always consider bringing a portable handbag hanger, so you never have to place the bag on the floor. Before storing, dust both the interior and exterior. Preserving the beauty of your collectibles Sneakers that you wear do not need professional cleaning, but they should be kept clean with products that won’t fade their color. However, clothing items or handbags that suffer stains or other marks should be professionally cleaned by a company that has sufficient experience in caring for high-value fashion and accessories. Therefore, look for someone who: Specializes in couture and designer handbags and will outsource to a relevant professional for any work they are unqualified to do on their own. Offers a detailed inspection of each piece and an explanation of what the work will entail. Packages items in the appropriate materials, including acid-free paper and breathable garment bags. Protecting your investment Some insurance carriers offer special “wearables” policies, but often we recommend scheduling the items as part of your collectible’s policy. The relevant coverage can vary significantly, though most policies include theft protection, water damage, and other common risks. We suggest you keep a regularly updated list of every item in your collection and be sure to speak with your broker when you acquire a new piece. Also, be sure you check in with your professional to ensure your collection is properly covered. Whether you are drawn to a piece because of its unique features, designer, or storied history – this guide will help keep the original beauty preserved. To ensure your collection will be treasured for years to come, be sure you work with a professional with deep expertise in this luxury market. ...

Filing an insurance claim in today’s evolving market

As we continue to navigate this unprecedented insurance landscape alongside you, our consultative approach to handling your potential claim is more important than ever. With insurance carriers continuing to raise premiums or, worse, decline renewals of long-standing policies, we want you to better understand the broader shift around filing even the smallest claims, which can help safeguard your long-term insurability. As such, our recommendation is that you call us first to discuss any loss or possible claim. To state it as clearly as possible, we never want you to file a claim directly with your insurance carrier before speaking with your personal account executive or with our dedicated, 24/7 claims team (800-221-5830). As your risk management advisors, we will look holistically at your insurance program and offer guidance as to what we think is the best approach for your specific situation, and given the market, so that you can make the most informed decision. This discussion will also allow us to best support your choice and advocate on your behalf. To help you prepare for such a conversation, we have outlined the six key considerations we would explore together before you decide whether to file a claim: 1. Was the loss caused by a catastrophic event? When the answer is yes, our team will most likely advise you to file a claim. The industry codes for catastrophic events like wildfires, floods, major storms, and earthquakes, which allows carriers to isolate related losses and means they will likely not hold that claim against you when it comes time to renew your policy. 2. Was a third party involved? If someone is injured or another person’s property is damaged, we will most likely recommend that you file a claim to ensure your assets are protected. With that in mind, we encourage you not to pull out your checkbook at the scene of a crash in the hope of avoiding an insurance claim, nor should you ever volunteer to cover someone’s losses before consulting our claims team or your account executive. 3. If no catastrophic event or third party was involved, what is your tolerance for paying out of pocket? Our claims experts have begun to ask how much clients are willing to cover themselves. If the cost of replacing whatever you lost falls within this amount, they then generally suggest you do not file a claim. 4. How will filing this claim impact your risk management strategy going forward? Someone who files too many run-of-the-mill claims risks being deemed by insurance carriers as “no longer profitable.” In the end, carriers are businesses that need to earn money to ensure that they can pay out claims while being financially successful, and that has become increasingly difficult to achieve as weather-related events have increased in frequency and severity as well as costs of replacement and reinsurance have risen. Additionally, construction (material and labor) and auto repair costs continue to increase. So, when it comes time to renew, they are paying more attention to claims histories, especially for water damage and auto accidents. That’s all the more reason we might recommend you handle whatever you can on your own, thus preserving your insurance for catastrophic losses. 5. Is there any reason for you to choose not to file this claim? No doubt it is frustrating to pay for insurance and then choose not to use it for a covered claim. However, after our discussion, you may decide that it’s not worth filing the claim as it could impact your future insurability and once you lose coverage it is very hard and expensive to get it back. If that’s the case, we will recommend other adjustments that may help lower your premiums, such as increasing deductibles or assessing exposures and coverage to make sure you are paying only for what you need. 6. Can we help you be even more proactive about preventing future losses? As you no doubt know, an ounce of prevention can save you thousands in repairs. This is why we regularly educate our client’s around proper maintenance. It’s crucial for you or your caretaker to do things like caulk around windows, clear drains and gutters of debris and check that the sump pump is operational. Taking the time to walk around your home and find the spots where a small investment will prevent a loss that in turn will save you money and effort in the future. And we are happy to provide further guidance and best practices if there is anything we can do to help in this process. Our primary goal is always to protect you and your family's long-term interests. This is why we will work together to guide and advocate for you throughout the claims process. And it’s why we hope your first step will be a call to our team and not the carrier. We can advise on the steps required to handle your immediate loss and keep you insured long-term, as we have done for clients for more than a century. ...

It’s never too early to talk about risk with your children

Parents understand the importance of teaching their children essential life skills, from safe driving to financial literacy, but many might not think to include crucial lessons around risk management. Yes, you counsel to look both ways before crossing a street and to be wary of strangers, but how about conversations around the potential liability and repercussions with certain behaviors and actions? As risk management experts, we think a lot about how best to educate the next generation about these topics and regularly help families do just that. To encourage you to do the same, we have provided some ways to help you educate your children about risk management. Educating Tweens & Teenagers about Risk Management It is never too early to make kids aware of the fact that their actions can impact the entire family—both your assets and reputation. But this age range is when their choices begin to matter. To that end, you want children this age to: Understand the perils of social media The majority of American children are already carrying smartphones by the time they are 11, and kids even younger use social media. New phone or new account, this access is best ushered in with a conversation about the consequences of posting something defamatory or bullying by text. Helping your kids understand that nothing they put or send online is private, and that unfortunately, you can be held responsible for all of it. (This article details why it’s important for the whole family to be careful with social media.) Avoid throwing out-of-control parties When kids hold parties while parents are away, they most likely don’t know that their parents could still be held responsible if something goes awry. That’s why it’s important to tell your children about “social host laws,” which hold the entire family responsible for incidents involving drugs and alcohol at their home, even if the parents were unaware. We also recommend you warn children against drinking games because if someone gets injured or dies from alcohol poisoning, a court could find they encouraged risky behaviors. (Here are some suggestions on how to mitigate the risks of teen drinking.) Practice defensive driving The day your child gets their learner’s permit is the day you should start accentuating the perils of driving, and, in particular, driving while under the influence. But you also need to teach them how to act in the event of an accident, even a minor one. For example, even a casual “sorry” could be seen as an acknowledgment of fault, or an admission like, “I wasn’t paying attention.” (See this article for more tips post-accident.) Educating College Students about Risk Management They may still be in school, but your child is technically no longer a minor. And that means their actions can have more significant consequences. As such, your college-aged child needs to: Understand that they are now more responsible for their actions Up until now, you have likely had ultimate responsibility in most situations but now is when you can help with the transition. For example, educating your children to report any broken items in their “new” residence in a timely manner will minimize their risk of having to pay for any of these damages. Remind them that though the car they are driving is registered in your name, they still will be implicated if anything goes wrong while they are behind the wheel. And alert them to the aforementioned risks of hosting a party, particularly those connected with underage drinking. Understand that their family may still be liable for what they do Though your college student may be away from home, as long as they remain your dependent you remain accountable for their actions. This liability extends beyond the obligations that come with signing or co-signing a lease. (In fact, parents might be liable even if it is only the child’s name on the lease, should a court determine them to be in your custody.) Parents have also been held responsible for their children’s involvement in harmful, or hazing incidents. Be especially careful when studying abroad For many students, a semester abroad is a rite of passage. To help ensure it is a wonderful experience, we recommend making a copy of all important documents to ease replacement in the event they are lost or stolen and providing your child with a list of local contacts—family as well as school administrators—who can act as local advocates in the event of an emergency. Also, it’s worth reminding them to always follow local protocols and laws. Your children are fortunate to have parents who are concerned about their ongoing welfare and willing to be engaged in helping them navigate risks. As they say, it takes a village, so as always, we are available to assist in this education process at any stage of your child’s life. ...

The impact of natural disasters on the insurance industry

With predictions of another season of significant weather events in the air, it’s important for us to give you an update on the current insurance landscape. The insurance industry is constantly evolving due to many factors and our goal is to keep you fully informed so you can better understand what is happening, why, and what you can do to mitigate the impact on your insurance program. The insurance industry is in the midst of a correction that largely began in California a few years ago and continues to spread across the country, particularly to regions most susceptible to wildfires, hurricanes, and other catastrophic climate events. Despite this, Americans continue to move into these areas, and that has put a serious strain on insurance carriers, which, in turn, is increasingly impacting even less-vulnerable areas. In the past five years, the U.S. has experienced 89 weather-related events that caused at least $1 billion in damage, and that trend is not abating. In 2022 there were 18 separate billion-dollar events making it the third most costly year on record for hurricanes, freezes, severe storms, wildfires, and floods. Floods, in fact, are the country’s most frequent and costliest natural disaster, now occurring often in areas not previously considered to be high-hazard ones. All of which means premiums continue to climb higher, non-renewals are more common than ever, and it is increasingly difficult to obtain coverage, wherever you live across the country. This is no doubt, frustrating news to clients but does have a silver lining: Several years of navigating this market has made our team extremely well equipped to guide you through its challenges and find creative solutions best fit for your unique needs. Three factors driving the market correction Insurance carriers engage in a constant struggle to sustain an economic model that allows them to pay the broadest number of claims. This moment in time remains a particularly tricky one for them because … 1. Capacity is low. Today’s carriers are significantly overexposed after decades of securing increasingly expensive homes in areas that have borne catastrophic losses from weather events. Even premiums that may seem unreasonably high to individual policyholders do not sufficiently cover carriers’ aggregate risk. Not only has this overexposure made carriers tighter with rates, but it has also made them more likely to refuse coverage altogether. This is the case in affected and unaffected areas alike, especially for owners of older homes that are not fitted with the latest protections or do not meet current building codes. A similar reluctance is occurring in areas like New York City, where aging infrastructure makes carriers wary. 2. Reinsurance costs are high. If carriers were left to pay off losses solely with the money they took in from premiums, insurance would be unsustainably expensive. That’s why they support their own exposure with reinsurance, essentially, coverage for losses they can’t cover on their own. Reinsurance guarantees carriers have enough cash no matter the cost of a loss. That said, the current combination of increased catastrophic events and heavier concentrations of multi-million-dollar homes in vulnerable areas impacts both insurance and reinsurance carriers. In fact, so drastically, reinsurance is now much costlier than before. When those rates rise, it makes it that much more complicated and expensive for carriers to provide adequate coverage for clients. There comes a tipping point when reinsurance becomes just too costly, especially government-regulated ones that are required to carry a certain surplus. 3. Inflation is making everything worse. The cost of replacing almost everything is significantly higher these days. Labor and materials are at sky-high prices because of ongoing supply-chain issues and skilled-worker shortages. Vehicle repair costs, to take one example, have risen steadily, and faster, in the past two years. The latest premium appliances may be more technologically advanced, but that also makes them more expensive. Much more basic materials such as paint, lumber, roofing and plumbing are pricier, too. And these costs continue to climb higher after a catastrophic event which puts pressure on available resources. Smart risk management strategies We continue to provide innovative solutions to help protect you and your belongings. But we also want to put you in the best possible position to ride out these challenging times. Specifically, we recommend that you… Do everything in your power to avoid a loss. Yes, accidents and climate events will unfortunately happen, but you can better prepare your home and property for both. Simple pre-emptive steps such as creating a brush-clearance zone in a wildfire-prone area or undergoing a windstorm mitigation inspection in storm-heavy areas are crucial. We can also help you schedule walk-throughs with professionals, who will spot potential trouble areas and recommend preventative measures. Likewise, we encourage you to embrace the available technology to minimize the likelihood of water loss or wind damage such as water leak detection devices and more. Protect your insurance coverage. A history of previous claims, even a short one, is often a strong predictor of premium hikes and non-renewals. It can also make it more difficult to secure new coverage. Thus, we encourage you to speak with your insurance professional prior to making any potential claim, so we can help you decide how best to proceed. (In some cases, that means taking on the expense yourself if possible.) Choose coverage strategically. If, as we suggest, you plan to file claims only in the most onerous scenarios, you can lower premiums by choosing higher deductibles. Other situations may call for you to self-insure or partially insure. For example, if your home has the best-possible wind protection and you do not carry a mortgage, foregoing wind coverage to make the premiums more reasonable might be a viable option. Contact us before signing a contract on a home: If you are considering buying in a risky geographic area, your broker can tell you if you will be able to purchase coverage—and whether the cost will be prohibitive. We understand that this is an extremely challenging market, but we are confident that we can help guide you to make it more manageable. If you have any questions about the current state of the market or whether your personal portfolio is adequately protected, please know we are always here to help guide you and your family.   ...

Risk management takeaways for successful families

The most successful family enterprises, namely those with single family offices whose wealth results from the private ownership of a business, have managed to sustain significant holdings through multiple generations. This feat ­necessitates navigating many different risks over long periods of time which offers valuable risk management lessons for any successful family, enterprise or not. Recently, we conducted our Family Enterprise Risk Index, a landmark survey of 145 family enterprises across the country, to better understand their current outlook on risk, along with what risk management practices are in place. We compiled the findings for the most relevant lessons that can help you and the many successful families, who are not part of a family enterprise, better improve their risk resiliency. The learnings below are based on our comprehensive analysis and include best practices for risk management that all high-net-worth households should consider. Takeaway 1: The person who oversees risk management is too often not a risk management expert. Our index uncovered that most of the family enterprises surveyed do not employ a risk management specialist, despite the challenging and changing landscape. In fact, 70% put risk management in the hands of an executive who also provides services such as tax preparation, bookkeeping and administration, insurance purchasing, investment management, philanthropy and trustee services. While we certainly don’t expect you to hire a full-time risk manager, it is still important to note based on this finding, that whoever is working with your insurance broker, whether that is a family member or an advisor, likely has many other tasks on their plate as well. From our experience, that means things like annual reviews, scheduling collectibles and updating beneficiaries may be delayed or could be overlooked. The solution: We send out regular communications about risks and insurance matters to keep you informed and we also encourage setting up annual reviews with your insurance advisor. Having an expert that you rely on, and that you can consult regularly, is invaluable. Takeaway 2: Family risks and educating the rising generation are not necessarily priorities. Among the most concerning findings of our study: more than 76% of respondents had no systematic or regularly scheduled risk-review process for the family. Furthermore, 41% conducted reviews on an ad-hoc basis only, and another 30% failed to conduct them at all. This leaves the family (and the enterprise) vulnerable. Even more concerning, of  those respondents that conduct either an ad-hoc or annual risk review, we found that 63% do not have an education process in place for the rising generations. And yet, as risk experts, we know that children, especially teenagers, bring specific challenges to the intergenerational table: problematic social media presences, unsupervised parties, car accidents, even issues related to apartments or hazing incidents in college. If such a lapse in focus occurs even in enterprises with the most to lose from it, we feel it is essential to remind every one of our clients to find time to discuss risk as a family. The solution: Rising generations need to be educated about risk and the potential impact of their indiscretions not only to their own lives but to your family’s well-being, too. In our experience, these conversations are the best way to improve risk resiliency. Families should meet each year to review coverage and make sure all is accounted for. (Your insurance advisor will always be happy to lead this conversation.) Likewise, parents should discuss with their children the various exposures they can, unwittingly, subject the family to, periodically at the dinner table and pointedly around life milestones, such as getting a driver’s license. Takeaway 3: Even when families do talk about risk, they often miss key vulnerabilities. Of the eight family-related risk areas surveyed, most respondents only had a plan in place for managing domestic staff. In fact, just around one-third of respondents had a plan in place for all other situations, which include concerns like travel emergency preparedness, emergency preparedness for natural disasters and family reputation management. These findings could potentially leave families within the enterprise vulnerable to a number of risks. The solution: When you are assessing your risk with family members or advisors, be sure you are looking holistically at all areas of risk. Additionally, confirm your insurance program adequately considers your current situation and covers all your exposures. Has your property become more susceptible to natural disasters? Have you sufficiently shielded yourselves from reputational damage? Are you covered if someone gets into trouble or falls ill while traveling abroad? These days, every successful family should understand that they are navigating a more diverse and complex set of risks due to the increase in natural disasters, cybercrimes, public health crises and the like. Even those who you would expect to be best positioned to deal with the evolving landscape, such as family enterprises, fall short in some areas. We can all learn a lot from their reality. Please contact us with any questions or concerns about your own risk management program. ...

Four ways to a more resilient digital life

After several challenging years, the idea of resilience has, understandably, become a popular topic. In fact, when the Harvard Business Review asked readers what they had learned in 2022, “resilience” was among the most common responses. As risk management experts, we are always thinking about areas where clients can build more resilience into their lifestyle. An increased digital footprint is one for most and thus an area where focus is due. Doing more things online brings tremendous convenience and opportunity, but also unfortunately new risks. To make sure that your digital experience is more the former than the latter, we are sharing best practices for leading a more resilient digital life. The following recommendations will help you better anticipate potential issues and adjust your online behaviors and transactions so that you are less at risk of hacking, lawsuits, and fraud. 1. Use connected devices cautiously. The world has quickly grown attached to online home security systems, smart speakers, and other connected devices and with good reason: they are convenient, comforting, and easy to use. Potential downside: Anything connected to the Internet can be hacked. For example, in 2022, two people were indicted for hacking into Ring systems, reporting hoax emergencies then livestreaming the police response. Researchers have also found a way to commandeer Amazon Echo speakers into performing tasks, like opening doors. And there is also concern that these devices listen to private conversations and track what is said. Building resilience best practice: We advise clients against relying on this type of “retail” security protection, as it is no substitute for a professional security team and network. Moreover, carriers only give credit toward premiums to policyholders that install a central station alarm system. Additionally, if you install Alexa or Echo devices, be sure to choose the most secure privacy and access settings, such as turning off voice recordings. 2. Be vigilant about posting publicly. Around 70% of Americans use social media platforms to connect with one another, engage with news content, share information, and entertain themselves. And more than 50 million people worldwide classify themselves as influencers or creators and use social media to promote or recommend brands and other things.  Potential downside: If your profile is public, any post might include glimpses of belongings—jewelry, expensive handbags, art— that would be alluring to any observant criminal. But there are other risks, too. Post something negative, and you could be sued for defamation or slander. Promote products that don’t perform, and you could be sued for fraud. Building resilience best practice: Scan the background of your stories and posts before making them public. (Better yet, if you are not an influencer, consider keeping your social accounts private.) Be especially cautious about showing your location or spotlighting your children. Talk with your broker to make sure your collections policy is up to date. Similarly, if your child is an influencer and not yet 18, you could be responsible for their online transgressions, so also ask about liability coverage. 3. Investigate online auctions before participating in them. The pandemic accelerated the relevance of virtual marketplaces – these days even major houses like Sotheby’s and Christie’s regularly host online auctions. Again, the convenience is a major selling point, erasing the need to travel to where the auction is. Potential downside: It’s harder to examine potential acquisitions. Color fluctuates depending on the monitor and condition, too, is also hard to discern. And, of course, the rise of online auctions has led inevitably to the rise of online auction scams. Building resilience best practice: You or your advisors should research an item’s provenance, compare prices of similar items and, most of all, limit your patronage to reputable auction houses. Two warning signs to look out for, particularly when you are dealing with a less-well-known seller: a price that seems too good to be true and a sense of urgency in the negotiation. We urge you to be extra cautious, as aside from maybe a small reimbursement, insurance policies do not usually cover fraudulent auction purchases. 4. Remember that there is currently no coverage for NFTs, and that the market is quite fluid. It was a rollercoaster year for non-fungible tokens (NFTs), the trendy digital artwork that is stored on the blockchain. Yes, the total trading volume in NFTs dropped significantly, but several of the most expensive iterations were sold, too. Clearly, they continue to hold interest for collectors. Potential downside: For now, carriers are not offering any protection for these collectibles, although we are in regular conversations with them about the need for solutions. Additionally, these transactions are rife with scams and recovery of NFTs is slow and difficult. Building resilience best practice: First and foremost, given the volatility and lack of regulation of this market, we suggest only spending an amount you are comfortable potentially losing. Even then, incorporate every possible safeguard with each purchase. This includes buying only from verified marketplaces; using a hardware wallet (which works like a flash drive) to access your NFTs and ignoring random emails as well as pop-ups that promise exclusive opportunities. In today’s challenging insurance landscape, it is especially crucial to build resilience into every aspect of your life. The digital environment is an area that demands extra caution due to the vast risk of exposure. In fact, we believe it requires a concerted effort from the whole family to truly fight cybercrime. These discussions and practicing the above risk management tips will help further increase your digital resiliency online. ...