Paying for Keeps

An annual reckoning with the tax man can trigger a meeting with the financial planner and the estate attorney. But the insurance agent? Alas, for many people that doesn’t happen until it’s too late, when accumulated wealth and assets can already be lost or damaged.

Stephen Schram wants to change that. An insurance specialist in Darien with Gowrie Group, he knows from experience that many homeowners believe their property and nest egg are adequately protected, only to learn when disaster strikes that they’re not.

According to Gowrie’s findings, seven out of ten luxury homes are not insured to value, 86 percent of valuables such as jewels and artwork are underinsured, and up to 70 percent of cyber-security threats go unprotected. The problems tend to occur because when you start out, life is simple, insurance-wise, but gets more complicated as your income grows and you acquire more expensive assets, such as second homes or boats. In the meantime, your exposure to liability grows, because of teen drivers, domestic help and the like.

“I absolutely believe that many people in Fairfield County are underinsured or poorly insured,” Schram says. “The more you have, the more susceptible you are to risks.”

He explains what he calls a circle of risk management: “The personal banker handles the portfolio. There’s tax help. And legal help. Together they provide eight-tenths of it. Without the other two tenths, without the right risk management, the circle isn’t connected.” In a nutshell, risk management in property and casualty insurance means knowing the value of how much you have, understanding how much you stand to lose and being aware of your deductible and replacement variables.

Today’s potential disasters go far beyond a simple car accident, house burglary or flooded basement. Now family-risk management includes protection from cyber crime, data hacking, social media exposure, domestic employee lawsuits, nonprofit board protection, global travel and kidnappings.

Many homeowners in the area are aware of this, yet fail to revisit their coverage beyond homeowner’s insurance, car insurance and that $1 million umbrella policy they bought, just in case, when they first obtained insurance. Today their net worth may well exceed $10 million—money that can go to a claimant without proper coverage in place. They may also fail to possess replacement insurance, only to learn too late that their totaled $60,000 car will only net $45,000 in claims paid, for example.

Schram says people these days should seek out an insurance agent who serves as a proactive consultant willing and able to manage your family’s exposure to risk. That agent should interview your family to determine your lifestyle, risks and needs, then obtain quotes from different insurance companies to cover those needs, then advise you on price, service and coverage under each policy. When it comes time to make a claim, that agent should shepherd the process.

“For a high-net-worth individual who’s got a lot of stuff, you can imagine how complex that can get. If somebody’s not on top of it, you could be exposed,” he says.


Many affluent customers mistakenly opt for a lower deductible on their homeowners’ policy, Schram says. What they may not realize is that allowing for a higher deductible can save thousands of dollars in the long run.

$5 Million House
Raise a $2K deductible to $10K

You are exposed for that $8,000 in potential losses each year

Savings: $3,000/yr. in premium costs.

In three years, you have essentially self-insured your deductible. From then on, you’re saving $3,000 per year (or $30,000 in ten years)



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