The SEIA Report Q2 2025
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. In a time marked by increasing climate volatility, highlighted by events like the devastating California wildfires and other natural disasters, understanding and optimizing your P&C coverage is not just prudent—it’s critical. This guide breaks down the essentials into the ABCs, helping you navigate this complex landscape and take steps to better shield your assets and lifestyle.
| A is for Assets: Protecting Your Valuable Property |
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The ‘Property’ component of P&C insurance is designed to help protect your physical assets against damage or loss from various perils such as fire, theft, vandalism, and natural disasters. For many individuals, “property” extends far beyond a primary residence. It encompasses large estates, custom-built homes, secondary or vacation properties worldwide, and significant collections of personal possessions.
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 insurance policy can address this gap by offering:
- Higher Coverage Limits: Sufficient limits to cover the full value of custom homes, extensive estates, and multiple properties.
- Replacement Cost Coverage: Allows damaged or destroyed property to be rebuilt or replaced to its original standard, using materials of like kind and quality, without deduction for depreciation. Guaranteed or extended replacement cost coverage offers an additional buffer to account for unexpected cost surges after widespread disasters.
- Scheduled Personal Property: Specific “scheduling” or “floating” items like fine art, jewelry, collectibles, or high-end electronics helps ensure they are covered for their appraised value.
- Coverage for Other Structures: Adequate protection for guesthouses, custom pools, extensive landscaping, and other structures on your property.
- Luxury and Collector Vehicles: Policies tailored for high-end automobiles, classic cars, recreational 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 focuses on liability – protecting you financially if you are found legally responsible for causing injury to another person or damage to their property. This coverage handles legal defense costs, settlements, and court judgments. For many individuals, personal liability exposure is significantly elevated due to factors like owning multiple properties, employing domestic staff, hosting events, serving on non-profit boards, and owning assets like pools, watercraft, or exotic cars.
Why Standard Limits Fall Short
In some cases, the liability limits included 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, putting personal wealth at risk.
The Crucial Role of Umbrella/Excess Liability Policies
A personal umbrella or excess liability policy provides an essential additional layer of protection. It sits “over” your underlying policies (home, auto, watercraft) and kicks in once their liability limits are exhausted.
| C is for Comprehensive & Custom Coverage: Tailoring Protection to Your Unique Needs |
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Standard, off-the-shelf insurance products are designed for the average consumer and often do not adequately address the complex risks and needs of more affluent individuals and families. In today’s environment of increasing risk and complexity, standard insurance simply won’t suffice for many individuals and families.
Ensuring your property and liability coverage is both comprehensive and customized is a critical step in safeguarding your lifestyle, legacy, and loved ones. If you haven’t reviewed your P&C coverage recently, now is the time. Partner with your advisor to evaluate current policies, identify potential gaps, and design a protection strategy tailored to your unique needs.
* Licensed attorney, not currently practicing. SEIA is not engaged in rendering legal, accounting, or tax services.
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