Property and Casualty Review Checklist

Property and casualty (P&C) insurance protects your physical assets and shields you from liability claims. Most policyholders set their coverage once and forget about it for years. This creates risk: property values change, assets accumulate, and coverage gaps widen. An annual review helps ensure your protection keeps pace with your actual exposure.

Homeowners Insurance: Replacement Cost vs. Actual Cash Value

Your homeowners policy covers two types of losses: damage to your dwelling and damage to personal property. How the insurer calculates payouts depends on whether you have replacement cost or actual cash value coverage.

Replacement Cost Coverage pays the amount needed to repair or rebuild your home and replace belongings with new items of similar quality. If a fire destroys your 10-year-old roof, replacement cost pays for a new roof.

Actual Cash Value (ACV) Coverage pays replacement cost minus depreciation. That same 10-year-old roof might have depreciated 40%, so you'd receive only 60% of replacement cost.

The premium difference between these options typically ranges from 10% to 20%. For a $600,000 home, replacement cost coverage might cost $2,400 annually versus $2,000 for ACV. The $400 premium difference provides substantially better protection in a claim scenario.

Dwelling coverage limits should reflect the full cost to rebuild your home, not its market value. Land doesn't burn, so your coverage need not equal your home's sale price. Obtain a replacement cost estimate from your insurer or an independent appraiser every 3-5 years, as construction costs fluctuate.

Auto Insurance: Understanding Liability Limits

Auto liability coverage protects you when you're at fault in an accident. Limits are expressed as three numbers (e.g., 100/300/100):

• First number: Bodily injury per person ($100,000)
• Second number: Bodily injury per accident ($300,000)
• Third number: Property damage per accident ($100,000)

State minimum requirements are often dangerously low. Many states require only 25/50/25 or less. With medical costs and vehicle prices rising, a serious accident can easily exceed these limits. When your liability coverage runs out, your personal assets become exposed.

Recommended minimum: 100/300/100 for most households. Those with significant assets ($500,000+) should consider 250/500/100 or higher, often paired with an umbrella policy.

Premium comparison for the same driver profile:

• 50/100/50 limits: approximately $800/year
• 100/300/100 limits: approximately $920/year
• 250/500/250 limits: approximately $1,050/year

The cost to double or triple your protection is often modest relative to the increased coverage.

Deductible Analysis: Premium vs. Out-of-Pocket Trade-offs

Your deductible is the amount you pay before insurance kicks in. Higher deductibles lower your premium but increase your exposure per claim.

Typical premium savings by deductible level (homeowners):

Break-even analysis: If you raise your deductible from $500 to $1,000, you save $240 annually but pay $500 more per claim. If you file a claim less than once every two years, the higher deductible saves money over time. However, if you'd struggle to pay a $2,500 deductible after a loss, the premium savings aren't worth the financial strain.

Auto deductibles follow similar logic. Most drivers choose $500 or $1,000 for collision and comprehensive coverage. A $1,000 deductible typically saves $150-$250 annually compared to $500.

Common Coverage Gaps

Standard homeowners and auto policies exclude several significant risks:

Flood damage is excluded from homeowners policies. The National Flood Insurance Program (NFIP) offers coverage up to $250,000 for dwellings and $100,000 for contents. Private flood insurance may provide higher limits. Even properties outside high-risk flood zones can flood; approximately 25% of flood claims come from moderate-to-low risk areas. Annual premiums range from $400 to $2,000+ depending on location and elevation.

Earthquake damage requires separate coverage in most states. California's CEA offers policies with typical premiums of $800-$3,000 annually for a $600,000 home, depending on construction type and proximity to fault lines. Deductibles are typically 10-15% of dwelling coverage.

Jewelry, art, and collectibles have sublimits in standard policies, often $1,500-$2,500 for jewelry. If you own valuable items, a scheduled personal property floater provides coverage for specific items at appraised value. A $10,000 engagement ring might cost $100-$150 annually to insure separately.

Home business equipment may not be fully covered under a standard homeowners policy. A home business endorsement or separate business policy addresses this gap.

Worked Example: Annual P&C Review for $600K Home and 2 Vehicles

The Situation: The Martinez family owns a home they purchased for $550,000 five years ago. Current estimated replacement cost is $620,000. They have two vehicles: a 2022 sedan and a 2020 SUV. Combined household assets total $850,000 including retirement accounts.

Current Coverage Review:

Homeowners Policy

• Dwelling coverage: $500,000 (inadequate—$120,000 below replacement cost)
• Personal property: $250,000 (50% of dwelling, standard)
• Liability: $300,000
• Deductible: $1,000
• Annual premium: $2,100

Auto Policy

• Liability: 50/100/50 (below recommended minimum)
• Collision deductible: $500
• Comprehensive deductible: $250
• Combined annual premium: $2,400

Identified Gaps:

1. Dwelling coverage $120,000 below replacement cost
2. Auto liability inadequate for $850,000 asset base
3. No flood coverage (property is in moderate-risk zone)
4. Wife's $15,000 jewelry exceeds policy sublimit
5. No umbrella policy despite significant assets

Recommended Changes:

New Total Annual Premium: $5,925 (was $4,500)

The $1,425 increase substantially improves protection. The umbrella policy alone provides $1 million in additional liability coverage for $350—strong value given their asset exposure.

Premium Factors to Discuss with Your Agent

During your annual review, ask about:

• Bundling discounts: Combining home and auto with one insurer often saves 10-20%
• Claims-free discounts: Some insurers reward 3-5 years without claims
• Safety features: Home security systems, smoke detectors, and vehicle safety features may reduce premiums
• Credit score impact: In most states, credit-based insurance scores affect premiums
• Loyalty discounts: Long-term customers sometimes receive rate reductions

Annual P&C Review Checklist

Homeowners Coverage

• Verify dwelling coverage matches current replacement cost estimate
• Confirm personal property limits cover your belongings
• Review liability limits relative to your net worth
• Check for replacement cost vs. ACV on personal property
• Evaluate deductible level against your emergency fund
• Assess flood risk and consider NFIP or private flood coverage
• Assess earthquake risk if in a seismic zone
• Inventory high-value items and compare to policy sublimits
• Add scheduled floaters for jewelry, art, or collectibles as needed

Auto Coverage

• Review liability limits (100/300/100 minimum recommended)
• Verify collision and comprehensive coverage on newer vehicles
• Consider dropping collision on vehicles worth under $5,000
• Evaluate deductible levels against premium savings
• Check uninsured/underinsured motorist coverage matches liability limits
• Review medical payments or PIP coverage

Overall Protection

• Consider umbrella policy if net worth exceeds $300,000
• Update policy after major purchases or life changes
• Document possessions with photos or video for claims purposes
• Compare quotes from 2-3 insurers every 2-3 years
• Review all policies with the same renewal date for easier tracking