Do I Need Property Insurance?
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Do I Need Property Insurance?

Property and casualty insurance is an umbrella term that covers several different types of insurance. It refers to two different types of protection: property refers to protection of the things you own, and casualty refers to financial protection in the event you are sued.

You may be asking yourself: do I need property insurance? There are numerous types of insurance policies that are grouped under the property and casualty insurance name and it’s important to know exactly what they cover.

Some of the most common types of property and casualty insurance include:

Homeowners Insurance
Homeowners insurance can cover numerous items associated with your home, from the property itself to what’s inside. You’ll want to make sure you are properly insured when it comes to your home, and that your policy is based on accurate and up-to-date replacement costs.

Homeowners insurance covers a multitude of losses, or perils, as they’re commonly referred to in insurance policies. Coverage can be provided on an “all perils” basis, or a “named perils” basis. Be sure to carefully read what types of perils are and are not covered under your policy.

Perils that typically are not covered include:

  • Acts of war
  • Flood damage
  • Natural disasters where damage is caused by floods or earth movement (such as earthquakes, mudslides, sinkholes)
  • Mold
  • Parts of the property that cannot be repaired (roofing, old plumbing, heating units)

Perils that typically are covered include:

  • Fire
  • Wind (although technically a natural disaster, winds from a tornado or hurricane are typically included under covered perils)
  • Hail
  • Theft

Another type of insurance, known as casualty insurance, will only cover a specifically named incident that happens in your home, such as injuries sustained on your property for which you are liable, or if your home is vandalized or damaged. There are also regionally specific policies that are offered by the government – these are usually a requirement by your lender.

Auto Insurance
Typically, auto insurance is required in almost every state for all drivers. It is important to know your auto insurance is adequate in the event you are liable for damage. This is direct asset protection and the coverage can vary significantly. Lower premiums do not necessarily mean adequate insurance coverage, so it’s a good idea to take cheaper rates with a grain of salt. Your coverage should be closely aligned with cash on hand, as well as emergency savings and taxable investment accounts.

Consult your insurance agent to review your auto insurance policy to ensure it’s appropriate given your assets subject to creditors.

Renter’s Insurance
Like homeowners insurance, renter’s insurance can help protect your belongings if you rent your home. If you rent, it’s a good idea to have this – and monthly premiums can be as low as $14 per month. This will come in handy if your neighbor upstairs leaves their water running and your ceiling starts to drip on your electronics, or someone leaves the front door to your building open and unwanted guests get inside.

Landlord Insurance
If you are a property owner renting out one or more residences (including single-family homes, condos, and apartments), then landlord insurance will protect your property from damages and lost income should damages make the properties unlivable.

Powersports Insurance
Powersports insurance covers the types of vehicles outside of your car. If you’re the proud owner of RVs and/or motorcycles, most states require you to have insurance. If you own a vehicle such as a boat or snowmobile, while it’s not required in every state (check out the laws in your state), consider purchasing powersports insurance anyway, so you can enjoy them without worry.

While the above are the most common types of property and casualty insurance, there are many other types of insurance for some of the more uncommon needs, such as insurance for drones or artwork. Many of these types of insurance can be grouped into other policies you already have – for instance, you may consider adding jewelry that is valued at over $2,500 on to your homeowner’s insurance. Just be careful to double-check the conditions under which those items are covered. And remember, bundling your insurances can often help lower costs.

Our Takeaway

Everyone’s needs are different, which is why it is important to figure out how much insurance coverage you need to protect yourself adequately without overpaying on unnecessary coverage. Schedule an appointment with a financial advisor for advice on which policies match with your long-term goals.

Download our free Personal Capital Insurance Guide

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All insurance analysis and insight provided is extended to you as a courtesy for educational purposes only. You should not rely on this information as the primary basis of your insurance planning decisions. We are not licensed insurance professionals. You should consult a qualified licensed insurance professional regarding your specific situation.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Amin Dabit is the Vice President of Advisory Services at Personal Capital. Amin brings over a dozen years of experience in private wealth management and financial planning. Amin leads Personal Capital's advisory team to identify and establish strategies for reaching clients' financial goals by providing comprehensive, customized financial advice designed to improve their financial lives.
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