Like a good estate plan, your property and casualty (P&C) program should adapt to the stages of your life. You have more assets to gift later in life than you do in your 20s, and you also have more assets to protect.
Additionally, priorities and passions change over time. Here are five questions to consider to help you make the same thoughtful decisions with your P&C program as you do with your estate plan.
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1. WOULD YOU REBUILD IF YOU HAD A TOTAL LOSS TO YOUR HOME?
Depending on where you live and the extent of devastation in the area, you could be facing years of architectural and permitting approval, cleanup and rebuilding. And, in the meantime, you’re in a rental home that will never be “home.” Most homeowners policies require you to rebuild. If you choose not to, the policy will give you only “actual cash value,” which is the replacement cost, less depreciation. Choosing an insurance policy that affords a cash-settlement option allows you to take the full policy limit and sell the land or keep it for future use. This flexibility offers peace of mind and lets you focus on what matters most to you.
2. HAVE YOU ADJUSTED PERSONAL PROPERTY FOR CURRENT AND FUTURE NEEDS?
Many of the items that make up a home are of sentimental value and not replaceable. Perhaps your plans would be to downsize if a total loss occurred. With most homeowners policies, personal property is simply a percentage of the dwelling amount, sometimes as high as 75 percent. Are you paying for coverage you don’t need?
3. HAVE YOU PLACED YOUR PROPERTY IN A TRUST OR LLC?
Any changes in the title of your property should be reflected in your P&C program to avoid gaps in coverage.
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Like a good estate plan, your property and casualty program should adapt to the stages of your life.
4. WHAT ARE THE INSURANCE CONCERNS FOR GIFTING ART?
Your trust and estate attorney crafts a plan to make sure your passion is preserved. Whether you’re gifting to a museum, funding a nonprofit or passing pieces down to heirs, you should be confident that the provenance and tax basis have been protected. Are you as confident that the insurance protecting those assets will respond appropriately when needed?
5. ARE YOU FACING IN-HOME CAREGIVER NEEDS?
You may just need more help around the home, or it could be time to consider a full-time caregiver. If you hire an individual, it’s important to understand your obligations under workers compensation and disability laws in your jurisdiction. Aside from insurance, at this vulnerable time you want to make sure that you’ve vetted the person coming into your home. We recommend a high-level background check prior to hiring either directly or through a service. A risk-management professional will also provide guidance around employment-practice liability exposures and loss-control recommendations.
As risk-management and insurance professionals, we aim to bring you advice, consultation and the appropriate services to protect you through all stages of your life.
Insurance services provided through NFP Property & Casualty Insurance, Inc., a subsidiary of NFP Corp. Doing business in California as NFP Property & Casualty Insurance Services, Inc. (Ca. License # 0F15715).
This article was originally published in the August/September 2016 issue of Worth.
