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Property & Casualty Insurance: An Overview

Property and casualty insurance protects the things you own while also providing liability coverage if you’re responsible for an accident that causes damage or injury to someone else.  Though property and casualty appears relatively straightforward, it’s easy to miss the mark when securing this type of policy.

An especially apt maxim when choosing a property and casualty provider is the tried but true, “You get what you pay for.”  While some carriers consistently earn high client satisfaction ratings for their coverage and handling of claims, others garner less acclaim and are known for increased frustration among clients.  Here’s how to determine which property and casualty policies are likely to meet your expectations, and which are destined to lead to buyers’ remorse.

Discount carriers will often limit the breadth of coverage they provide.  Still, the coverages in a discount carrier’s policy might be exactly what you need. An experienced, trusted, industry resource can explain how specific policy differences or exclusions are likely to impact you.

Understanding your options also means having an understanding of the difference between two primary valuation methods used by the industry: replacement cost and actual cash value (ACV). This coverage decision will impact both the premium you pay and the range of outcomes in the event of a covered loss.

Replacement cost coverage, while the more costly of the two, also provides the most robust coverage.  A replacement cost policy’s goal is to restore an item to its condition prior to the loss. The upper limit of this coverage is based on the real cost to purchase the item at the time of replacement.

Actual cash value coverage, though it shares replacement cost’s goal of restoring the item to its pre-loss condition, deducts depreciation from replacement cost prior to settling a claim.  This often causes a gap between what it actually costs to replace or restore an item and the proceeds received from the insurance carrier. For this reason, homes are less likely than personal property to be insured using ACV.

Some items maintain or increase in value over time.  Personal property such as special collections or rare items should have their own insurance policy schedule. Scheduling items will generally trigger additional premium charges but without a schedule you run the risk of being under-insured or uninsured in the event of damage or loss.  Jewelry, artwork, firearms, sports cards, coin collections, or any difficult to replace items should be covered by schedule. While the process of valuing scheduled items varies among insurers, most simply require a receipt or appraisal.

Reviewing the associated deductibles and premiums on your existing policies may show opportunities to save on costs or address gaps in coverage. In coordination with your advisor, request a review from a trusted, licensed insurance agent familiar with the ins and outs of various coverages, as well as the breadth of coverage available from different insurers. 

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