Insurance Is the First Line of Defense
The United States insurance market, worth an estimated $1.7 trillion, underwrites risks that
could otherwise devastate individuals, homes, and businesses.1 Yet clients sometimes view
insurance only as a cost instead of an investment that protects their wealth and legacy.
Recent shifts in the insurance market have led to many clients paying more and getting less
from their policies, providing advisors with opportunities to reframe the insurance discussion and
explore reviewing or supplementing coverages.
Homeowner's Insurance: The Fortress of Financial Freedom
According to a recent report from Policygenius, homeowner insurance premiums increased by
more than 20 percent between May 2022 and May 2023 due to escalating claim costs from
severe weather events.2 Some insurers are also opting either to not renew policies in high-risk
areas or to significantly increase deductibles.3 Although these statistics may sound discouraging
to many homeowners, it is still important that they maintain appropriate coverage. According to
the Insurance Information Institute, each year, approximately one in 425 insured homes has a
property claim related to fire and lightning and one in 700 for property damage due to theft.4
Although this percentage may seem small, we never know when we could be a claimant.
Having insurance is one way to be prepared.
- Who needs it: All homeowners, from first-time buyers to investment property owners
and those with mortgages requiring coverage, need homeowner's insurance.
- How it protects: Depending on the policy terms, it covers repairs or rebuilding after
fires, storms, or theft, plus liability for on-property injuries.
- Estate planning tie-in: A home is often a client's largest asset. Homeowner's insurance
preserves its value, but clients may be tempted to reduce coverage as premiums rise.
However, coverage should align with current replacement costs in light of increasing
climate risks and property values.
- Sales opportunity: Clients may be shopping for deals. However, they should also
understand the long-term implications of homeowner's insurance for their estate and
heirs. With higher tort lawsuit awards and rebuilding costs, robust policies are critical.
Discuss scenarios where a property is damaged before transfer and how insurance
proceeds can facilitate repairs or provide funds to beneficiaries. Such scenarios also tie
into discussions about who will manage and maintain the property after the client passes
away and before a new owner takes possession, as well as the importance of continued
coverage.
Renter's Insurance: Underutilized Asset Armor
Renting is increasingly more affordable than buying a home. Nationally, the average mortgage
payment costs 38 percent more per month than the average rent.5 Many people, including a
growing share of wealthy Americans, are choosing to rent rather than buy in the current market.6
Another perk of renting is that renter's insurance is highly affordable, costing around $15 to $25
monthly. However, only approximately 37 percent of renters have it.7
- Who needs it: Renters of apartments, condos, or houses, especially millennials or Gen
Zers building wealth, need renter's insurance.
- How it protects: How it protects: Renter's insurance replaces personal property such as electronics or
furniture after theft or fire and covers liability for injuries on the rented premises. It also
funds temporary housing if the space becomes uninhabitable.
- Estate planning tie-in: For clients who rent, their personal property, from heirlooms to
technology, can be a major component of their net wealth. Emphasize that, even without
home ownership, their possessions have value (both financial and sentimental) and are
susceptible to loss.
- Sales opportunity: Younger individuals are more likely to rent than older individuals.
Consider targeting young clients who may not have significant liquid assets. Renters
may be unaware that their landlord's policy does not cover them. The average claim for
loss due to theft and burglary is approximately $3,0008 - about 20 times higher than the
average annual premium.9 Some landlords may require insurance even if state or local
laws do not. You can also add value for your clients by informing them that, if they run
an at-home business, standard renter's insurance policies may have limitations or
exclusions regarding business-related activities, which may necessitate a separate
business insurance policy.
Car Insurance: High-Octane Wealth Defender
Car insurance is nonnegotiable, but these days, clients may wish that the costs were. Premiums
jumped 7.5 percent in 2025, in addition to a 16.5 percent increase in 2024.10 Higher rates mean
that more drivers are choosing to drive uninsured, leading to higher risks and premiums for
everyone.11
- Who needs it: Vehicle owners or lessees need car insurance.
- How it protects: Car insurance covers repairs, medical bills, and legal fees from
accidents, plus nonaccident damage, such as from vandalism or flooding.
- Estate planning tie-in: Whether gifted or sold, vehicles can be valuable estate assets.
Some are worth even more than real estate. Adequate car insurance protects the estate
from liability claims arising from accidents that occur before settlement. Describe the
potential for lawsuits to deplete estate assets intended for beneficiaries and discuss how
uninsured or underinsured motorist coverage could provide a financial lifeline to the
estate or surviving family members in the event of a fatal accident caused by an
uninsured or underinsured driver. Recommend that personal representatives, executors,
and successor trustees confirm coverage after the decedent's death, and discuss how to
maintain protection during estate administration.
- Sales opportunity: Forty-two percent of auto insurance customers are shopping for
better rates.12 Pitch usage-based policies for low-mileage or safe drivers, bundled
policies, or specialized coverage for electric or classic cars.
Umbrella Policy: The Million-Dollar Safety Net
An umbrella policy can offer added protection of around $1 million for about $200 annually.13 In
an increasingly litigious society, the risk of facing a substantial lawsuit should not be
underestimated. Verdicts in personal injury lawsuits can easily exceed standard homeowner's or
auto insurance limits. An umbrella policy is a low-cost hedge against a potentially large liability
claim.
- Who needs it: An umbrella policy can protect clients with significant assets or multiple
properties, landlords of rental properties, or people with high-risk lifestyles (e.g., pet
owners or event hosts), as well as professionals, such as doctors, who face litigation
risks.
- How it protects: An umbrella policy extends liability coverage beyond standard policies,
covering lawsuits from accidents, defamation, or property damage, up to one, five, or
even 10 million dollars.
- Estate planning tie-in: An umbrella policy protects the value of an estate by covering
unforeseen legal liabilities. Shielding assets from large liability claims can ensure that
more of the wealth accumulated over a lifetime is preserved for future generations.
- Sales opportunity: With rising liability risks, suggest umbrella policies to affluent clients,
landlords, and individuals in high-liability-risk professions. Research suggests that highnet-worth clients may be lawsuit targets, or at least they perceive themselves that way in
an uncertain economy, but they often lack the proper types and amounts of liability
insurance.14
Business Insurance: The Empire-Building Enforcer
Small businesses are the backbone of the US economy, but many are not covering their backs
with the right types and amounts of insurance coverage. Research shows that 75 percent of
small businesses are underinsured,15 leaving them vulnerable to losses resulting from property
damage, lawsuits, and cybercrime. Commercial clients also face higher premiums and tougher
underwriting across general liability, property, and cyber policies - often with new exclusions
and longer claim processing times.
- Who needs it: Business owners, freelancers, and entrepreneurs from startups to
corporations need business insurance.
- How it protects: Business insurance covers property damage, lawsuits, employee
injuries, and business interruptions. General liability policies handle customer injuries,
and professional liability policies shield against negligence claims.
- Estate planning tie-in: A small business owner's company may be their largest estate
asset, destined for succession or sale. Business insurance preserves its value by
covering losses that could force liquidation. The right business insurance not only
protects the business during the owner's lifetime but also facilitates its smooth and fullvalue transition to the next generation.
- Sales opportunity: Explore tailored policies for small businesses or freelancers using
relevant statistics (e.g., cyberattacks are rising and frequently target small businesses).
Note the wave of retiring small business owners and the need for succession planning,
which can involve key person insurance for estate liquidity and buy-sell agreements
funded by life insurance.
Stronger Together: We Can Partner for Client Protection
Insurance can be overlooked until it is needed most. However, more clients may be paying
attention to their policies now in a world of rising premiums, denied claims, and evolving risks.
As they rethink their first line of defense against losses that could force them to dip into savings,
sell investments, or liquidate business assets at great cost to themselves and their families, we
can help shift the conversation in ways that benefit them and create cross-selling opportunities
for us in the multitrillion-dollar insurance industry. Call us to discuss ways we can partner to
ensure that our mutual clients are protecting themselves and their legacies for the next
generation.
MEREDITH | PC
4325 Windsor Centre Trail
Suite 400
Flower Mound Texas 75028
214-513-1013
This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.
You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions about this or any matters relating to estate planning.
