Unpacking the Benefits of Property & Casualty Insurance
The start of a new year can present an opportunity to refocus on health and wellness, including financial protection and well-being. As we look to find ways to ensure our financial house is in order, it is important to include an annual review of the insurance that protects your actual house, property and general liability to ensure you have sufficient and optimal coverage before you may need it.
The insurance that provides this kind of coverage is aptly called “property and casualty” insurance. Property insurance helps cover the “stuff” you own, like your home(s) or your car(s). Casualty insurance provides liability coverage (often referred to as “umbrella” coverage) to help protect you and your financial assets in the event you are found legally responsible for an accident or incident where another party is impacted.
Even though this kind of coverage is important for most people, being under-insured is not uncommon. Life gets busy. Equity grows. Remodels happen. Investment properties and teenage drivers creep into the mix. Suddenly your coverage may not be sufficient.
A regular review of your insurance can help identify exactly what your policies cover, and where there could be gaps. Many insurance laws have also changed in recent years, so what’s required may have changed, or coverage in certain areas can be more difficult to obtain. So, a periodic discussion with your Litman Gregory Wealth Management advisor and your insurance professional can help identify areas to consider.
What should you be looking for in your coverage or discuss with your property/casualty insurance professional?
We suggest you ask about…
- The common causes of claims in your area. The answers might surprise you, e.g., water leaks, sewer backup, litigation, wildfire.
- Whether your policy includes sewer backup (yuck!) coverage. It’s not something people want to talk about but is a relatively common claim and many policies offer low if any coverage.
- If you have a second property or rental, what is covered? VRBO or Airbnb? It’s a good idea to check to see that the policy is written specifically for and covers these uses.
- Whether you have adequate replacement cost coverage if you needed to rebuild. Construction costs have spiked in recent years. After a local disaster, there can be a surge in demand for contractors. Does your policy include language covering even higher replacement costs in the event of a demand surge? How much will the policy cover for bringing repaired items up to current building codes? Often this is not covered by “replacement” cost and requires additional coverage.
- Will your policy pay for a rental while you are making repairs?
- Will your policy pay you cash if you don’t want to rebuild or want to rebuild elsewhere?
- If you have considered potential liabilities that could arise at your home, rental or while driving your car. It is important to understand which liabilities your policy will cover and determine if coverage is sufficient with or without an umbrella policy.
In addition to the above, here are some questions to consider, as these situations would be important to mention to your insurance provider so they can evaluate any changes needed to your coverage:
- Are you living in a new home, or plan to make a change soon?
- Has your home value increased significantly since your coverage was purchased?
- Did you recently remodel or install a swimming pool?
- Do you have teenage drivers?
- Do you use your car for business?
- Has your wealth increased significantly?
- Did you recently adopt a pet?
- Do you own an investment property?
Property and casualty insurance is one of the common planning topics we discuss with our clients to ensure that the proper coverage is in place to protect them and their property in the event of loss or liability. What we’ve covered in this post are only some of the key areas to consider, so we recommend reaching out to your advisor to discuss your situation further. If needed, your advisor can also provide a referral to a trusted property/casualty insurance professional to review the details of your existing coverage.