When disaster strikes — whether it's an accident, burglary, fire, storm or lawsuit — having the right property and casualty insurance can be the difference between a quick recovery and a financial catastrophe. Do you have the coverage you need to help protect both your property and your overall financial well-being?
Property and casualty insurance includes coverage for physical property, like your home, vehicles and other possessions. It also provides liability protection if someone is injured on your property or you're found legally responsible for damages.
Standard homeowners insurance typically covers a wide range of areas:
Homeowners policies generally protect against risks, such as theft, fire and storms. However, certain natural disasters can require separate policies.
Homeowners, auto and liability policies aren't one-size-fits-all. As you evaluate your insurance coverage, consider these four essential factors:
1. Actual cash value vs. replacement cost. An actual cash value policy reimburses you based on the depreciated value of the damaged property, often leaving you with out-of-pocket costs. A replacement cost policy, on the other hand, covers the full cost of replacing the damaged item with a new one. For even greater protection, extended replacement cost coverage can be added to a homeowners policy to provide additional funds if construction costs surge after a disaster, which is common.
2. Deductibles and premiums. Your deductible — the amount you must pay out of pocket before your insurance kicks in — directly impacts your premium. Raising your deductible can significantly reduce your premium. But you must be sure you can comfortably cover the deductible in an emergency. Some homeowners policies include percentage-based deductibles for disasters like hurricanes that can be far higher than flat-rate amounts.
3. Liability limits. Basic homeowners and auto policies have liability limits, which may not be enough to protect you in today's litigious climate — especially if your net worth is high. You may need to purchase additional liability coverage to have sufficient protection.
4. Policy exclusions. Every insurance policy has exclusions for specific events or types of damages. Common homeowners insurance exclusions include:
Review your policy's exclusions carefully. If you live in a region with elevated risk, you may need to purchase separate policies or endorsements to fill the gaps.
If a standard policy leaves gaps in your protection, add-ons and supplemental coverage can help fill them. For example, an umbrella policy provides an additional layer of liability protection, typically starting at $1 million and scaling up as needed.
When it comes to natural disasters, flooding is the most common type in the United States, and it's excluded from most homeowners policies, regardless of location. The National Flood Insurance Program (NFIP) offers flood insurance coverage through the Federal Emergency Management Agency and private insurers — even for homes outside high-risk zones.
Homeowners insurance typically does include coverage for other types of storm damage. But, in hurricane-prone states, homeowners may face high-wind deductibles or need separate policies. Similarly, homeowners in wildfire-prone areas are finding that coverage is becoming more expensive — and, in some cases, difficult to get at all.
Here are some strategies to consider if you're having trouble obtaining affordable, comprehensive coverage in a high-risk zone:
Taking a proactive stance can help you maintain coverage, avoid excessive premiums, and more effectively protect your home and assets.
The stakes are considerably higher for high-net-worth individuals. Wealthier households face increased exposure to liability and usually have more complex property holdings, which may include valuable personal property.
For example, standard homeowners policies often fall short for luxury properties. High-value home insurance may be necessary to provide adequate protection. It can offer:
Similarly, specialized protection for high-value possessions is essential. Here's a breakdown of common categories that require enhanced coverage:
Insurance isn't a "set it and forget it" tool. As your life evolves, so should your property and casualty insurance. Otherwise, you might find yourself with inadequate coverage. Events that should prompt a review include:
A periodic insurance review with your financial, legal and insurance advisors will help ensure your coverage remains aligned with your needs, goals and risk exposure.
Whether you're protecting a modest home and a few family vehicles or a multimillion-dollar estate with fine art and antiques plus several luxury vehicles, peace of mind doesn't come from simply having property and casualty insurance. It comes from having the right coverage to meet your needs. Your financial, legal and insurance advisors can help you obtain insurance coverage that fits your current assets, lifestyle and goals.
About half of the 50 states offer programs to ensure that homeowners in high-risk areas have access to essential insurance coverage. Here's a list of state programs with links to their websites:
These websites provide more information about the specific coverage and eligibility requirements.