For years, high-net-worth (HNW) individuals made decisions about where to live based on a familiar checklist: taxes, climate, cost of housing, quality of life. Insurance was mostly an afterthought… something to sort out after the deal closed.
More than 160,000 millionaires have relocated out of California and New York since 2018, drawn to states like Florida and Texas for tax advantages and warmer climates. For the first time, though, insurance costs are factoring into HNW individuals' choices about where to relocate. Over the past nine months, clients have started asking questions that rarely used to come up before purchasing another property: What does coverage cost here?
Buying insurance wasn't always a difficult question for this client segment, but it's now a key consideration. Even when coverage is available, costs can reach $20,000 to $40,000 or more per month for a single property, depending on location and risk profile.
These shifts present both an opening and a responsibility for advisors to make insurance part of the conversation before a client falls in love with a property and the options narrow.
WHAT ATTRACTS CLIENTS IS OFTEN WHAT PUTS THEM AT RISK
There's a pattern worth naming: the same conditions that draw HNW individuals to a location frequently create the exposures that make it difficult to insure. Florida offers warmth, tax advantages and coastal living––along with some of the most volatile homeowners insurance costs in the country. Texas provides economic opportunity and lifestyle appeal, in addition to hail events that total luxury vehicles parked in open driveways.
One client purchased a property in the North Carolina mountains specifically to get away from Florida's storm exposure. Three weeks after moving in, a hurricane hit his new home. The assumption of safety, based on geography alone, turned out to be wrong.
During the pandemic, Montana and Wyoming attracted HNW individuals due to the wide open space and lack of density. Some discovered too late that their property had no reliable water source nearby, leaving them either uninsurable or facing significant mitigation costs just to secure coverage.
The pattern holds across U.S. markets. A location that may check every box on taxes, climate and lifestyle almost always has something else going on that drives up the cost of living. Increasingly, that something is insurance.
5 WAYS ADVISORS CAN RESPOND
Advisors can help HNW clients navigate this landscape by initiating the insurance conversation early — before a property is chosen, before an offer is made and before emotional attachment makes difficult news harder to deliver. Here are five ways advisors can get ahead of the conversation and help clients make more informed purchase decisions:
- Know the insurance picture before your client buys. Two properties can sit side by side in Florida but carry insurance costs that differ by a factor of three. The difference usually has nothing to do with size or location. One roof may be reinforced, the other not. One home may be better protected against wind. Those mitigation details may be invisible to a buyer focused on the property but are exactly what underwriters see when they price the risk.
- Factor in lifetime cost, not just price of admission. HNW clients are accustomed to evaluating what something costs to acquire, but many underestimate what an asset really costs to maintain. An expensive boat, for example, can carry maintenance and insurance costs that run over $100,000 a month. A coastal property or home in a hail corridor are no different. Helping clients see the full cost of a location –– including premiums, mitigation investments and exposure to weather events –– before they commit is where advisors add the most value.
- Build a risk mitigation plan. For existing properties, there is almost always something a client can do to improve their risk profile. A client who invested $150,000 in a new roof, for instance, saw his annual premium drop from $72,000 to $18,000. The right improvements can protect clients' property, strengthen insurability and significantly reduce what they pay to maintain coverage.
- Involve insurers early on new construction. For clients building, involve carriers from day one. Water suppression systems, fire retardants and construction standards that underwriters look for at placement are decisions made during the build. Trying to retrofit coverage requirements into a finished home can turn into a far more expensive conversation.
- Understand what drives costs by location. Tort environments, weather patterns and local economics all influence what insurance costs in each market, and none of them stay static. Louisiana remains one of the most expensive states in the country to insure, due to a combination of severe weather patterns and its litigious environment. Florida is a useful case study in volatility: litigation reform is driving premiums down in some segments, but carriers remain one significant storm away from reversing course. Advisors who understand these dynamics can warn clients about potential cost shifts before they commit to a property.
THE ADVISOR'S ROLE IS CHANGING
As wealth continues to migrate into new and complex risk territory, the most valuable thing an advisor can offer is early involvement — getting into the conversation before a client commits to a location. HNW individuals with a strategic partner who goes beyond placing coverage are much more likely to avoid the situations that are becoming increasingly common: a property that turns out to be uninsurable, premiums that make ownership financially unworkable or a renewal that arrives with costs no one anticipated.
---
Edits Made
- Spacing – Removed the extra blank line between the headline "WEALTH MIGRATION HAS A NEW VARIABLE: INSURANCE" and the first paragraph to standardize to one blank line between sections.
- Spacing – Removed the extra blank line between the subheading "WHAT ATTRACTS CLIENTS IS OFTEN WHAT PUTS THEM AT RISK" and the paragraph that follows it.
- Spacing – Removed the extra blank line between the subheading "5 WAYS ADVISORS CAN RESPOND" and the paragraph that follows it.
- Spacing – Removed the extra blank line between the subheading "THE ADVISOR'S ROLE IS CHANGING" and the paragraph that follows it.
- Spacing – Removed the extra blank line after the "Build a risk mitigation plan" paragraph (the trailing space before "Involve insurers…").
- Grammar – Changed the em dash style in the final paragraph from a hyphen-space combination ("early involvement - getting") to a proper em dash ("early involvement — getting"), consistent with the em dash style used elsewhere in the article.
