By David A. Robertson, JD*, CFP®
Partner
Beyond Standard Coverage: The Essential ABCs of Property & Casualty Insurance
For individuals and families with significant assets, protecting what you’ve built requires more than standard insurance policies. Property and Casualty (P&C) insurance is a cornerstone of comprehensive wealth protection, yet its nuances are often misunderstood. As climate-related risks increase—with events like California wildfires underscoring potential exposure—understanding and optimizing your P&C coverage is not just prudent—it’s critical. This guide outlines the ABCs, to help you navigate the fundamentals.
| A is for Assets: Protecting Your Valuable Property |
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The ‘Property’ component of P&C insurance safeguards physical assets against damage or loss from various perils such as fire, theft, vandalism, and natural disasters. For many, “property” includes not just a primary residence but also estates, custom homes, worldwide vacation properties, and valuable collections.
Understanding Coverage Needs for Unique Assets
Standard homeowners policies often have sub-limits for valuable items like jewelry, art, antiques, or wine collections, which are typically far below their actual worth. A more comprehensive policy can address this gap by offering:
- Higher Coverage Limits: Sufficient limits for custom homes, extensive estates, and multiple properties.
- Replacement Cost Coverage: Rebuilding or replacing property to its original standard without depreciation, with extended replacement cost offering protection.
- Scheduled Personal Property: Specific “scheduling” or “floating” high-value items like art, jewelry, and electronics at their appraised value.
- Coverage for Other Structures: Protection for guesthouses, custom pools, and other structures.
- Luxury and Collector Vehicles: Specialized coverage for high-end cars, classic vehicles, yachts, and private aircraft.
| B is for Being Liable: Shielding Yourself with Casualty Insurance |
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The ‘Casualty’ portion of P&C insurance protects against liability, covering legal costs, settlements, and judgments if you’re found responsible for injury or property damage. Personal liability risks increase with multiple properties, domestic staff, hosting events, nonprofit board involvement, and owning assets like pools, watercraft, or exotic cars.
Why Standard Limits Fall Short
Liability limits in standard homeowners (typically $300,000 – $500,000) or auto policies are often grossly inadequate to protect substantial assets. A major lawsuit could potentially exceed these limits.
The Crucial Role of Umbrella/Excess Liability Policies
An umbrella or excess liability policy adds an extra layer of protection, activating once the limits of your primary policies (home, auto, watercraft) are exhausted.
| C is for Comprehensive & Custom Coverage: Tailoring Protection to Your Unique Needs |
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Standard insurance products are designed for the average consumer and often do not adequately address the unique risks of affluent individuals and families. In today’s complex environment, off-the-shelf coverage may fall short.
Ensuring your property and liability coverage is comprehensive, customized, and insured by a carrier familiar with your needs is key to protecting your lifestyle, legacy, and loved ones. To make certain you know your ABCs, a periodic review and analysis of all your P&C coverage by a qualified professional is paramount with today’s fluid insurance markets. Partner with your advisor to design a strategy tailored to your unique needs.
* Licensed attorney, not currently practicing. SIA is not engaged in rendering legal, accounting, or tax services.
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