The Property and Liability Insurance Mistakes That Leave Inheritors Exposed
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What you don't know about your homeowner's insurance could cost you everything.
In this episode of Heir Necessities, I break down the biggest property + casualty insurance mistakes inheritors make, from underinsured homes to dangerous gaps in liability coverage.
I see these mistakes in most of the policies I review. They're probably hiding in your insurance, too.
We're talking underinsured homes, water damage surprises, and the liability exposure too many inheritors don't consider.
If you're a high-net-worth inheritor insured by State Farm or Geico, I need you to pay attention.
Listen to this episode for all the information you need to make sure all your most valuable assets are fully protected in 2026
🗓️ Schedule a FREE call to talk more about how I can help you navigate a current or future inheritance.
Transcript:
What Is Property and Casualty Insurance and Why Does It Matter for Inheritors?
Hey, I'm Katherine and thanks for joining me at Heir Necessities, the podcast that turns complex financial topics into real talk for Gen X, Millennial, and Gen Z inheritors. Each episode of the podcast, I break down a different topic related to generational wealth and inheritance. My goal is that you can stop asking Google or ChatGPT what to do with your money and come here instead for real talk, real advice, and real solutions that you can implement today.
On this week's episode, we are diving into insurance, specifically property and casualty insurance. When we talk about insurance, there are two different types that we're talking about: property and casualty, which is your homeowner's, auto, umbrella, earthquake, and fire, and then there's life and disability, which is exactly what it sounds like. Originally I was going to push these two things into the same episode, but I started talking and I realized I had done a full episode only on property and casualty coverage.
If you hear any references to life or disability in this episode, that is coming in an episode later this year. Before we dive into it, if you're enjoying Heir Necessities and want to help support the show, I would be so appreciative if you could leave a review or star rating on Spotify, Apple, wherever you listen to podcasts. It's hugely helpful for the show, and more importantly, it helps me reach and support more inheritors like you.
What Is a Captive Broker vs. an Independent Insurance Broker?
I don't sell insurance, so I have no financial incentive in anything I talk about in this video. But when you purchase insurance, you're buying it from a broker who is compensated. They'll get a commission based on the policies they sold you, and then they'll also get residuals from the insurance company.
Most inheritors are going to have insurance policies that they got from their insurance company — State Farm, Geico, USAA if you're lucky, whoever it is — and you're going to have your bundled policies: your homeowners, your auto, umbrella coverage, earthquake coverage, fire, flood insurance, and all things depending on where you live. Those are going to be policies that you bought from what is called a captive broker. A captive broker is someone like your State Farm agent.
You go to them and they will only sell you State Farm policies. And so they are going to tell you that these State Farm policies are the greatest policies — they're not going to show you any other options, they're just going to put you in it and let it ride. This is as opposed to a generalized insurance broker who you go to, you lay out your situation, and then they get you quotes from a whole bunch of different insurance companies, which is the way that you're not only going to get the best price, but you're also going to get the best coverage.
Are State Farm and Geico Good Insurance for High Net Worth Inheritors?
Because there are tons of issues with using a captive broker, and number one is that these people are salespeople. I'm not saying that they're all bad people, and I'm not saying that there aren't a lot of them who are very good at their jobs, but first and foremost, their only job is to sell you insurance — their job is not to educate you. And especially if you are a current and future inheritor with a relatively high net worth, you are not the target State Farm customer.
If your house is more expensive, if your cars are more expensive, if you need increased liability coverage, State Farm is not built to serve you — they are built to serve the average customer. And this is true for all of the insurance companies whose names you know across the board. Any insurance company you see advertising on TV — their target customer is not you if you are a high net worth current or future inheritor, so right off the bat, you have a mismatch.
Then the second issue I see is that you bought these policies when you bought your house, you probably redid all your insurance coverages, you got a deal, you're happy — whatever, I don't know, five, six, seven, eight years ago. And then they've been static, and in the meantime, your house has appreciated in value, you have remodeled your house, you have made some sort of cosmetic updates that are more expensive, but you still have that same amount of insurance coverage. So there's a very high likelihood that you are underinsured.
Is Your Home Underinsured? Why Rebuilding Costs May Far Exceed Your Coverage
If a broker who knew what they were doing and was focused on education and risk management — which is what insurance professionals should be focused on, not just selling you insurance — they would look at your house and they would look at how much it would cost to rebuild it. Not how much your insurance company thinks it told you it cost, but if you went out and you hired a design-build firm who could rebuild your house to the quality where it is now, you would not have enough money under your insurance policy to pay for that build. And I see that over and over and over.
I would say I see it in maybe 80 to 90% of the insurance policies I review — it's just straight basic underinsurance on home costs. Because the cost to buy your home might not be the same as the cost to rebuild your home. Building materials are getting more and more expensive, labor is getting more and more expensive, and the costs are insane.
So there's a significant likelihood that you are underinsured on that front. The second piece is that insurance contracts are complicated and there are all kinds of areas where you might not have coverage and you might not even know about it. Water is a great example of this, where you might assume that if a pipe bursts and there's flooding, or if water leaks into your house, you're covered in both of those scenarios — but those are actually different areas of your policy and are covered under different clauses.
So you might have coverage for one and not another. And if you don't have someone who really knows what they're doing on the insurance front diving into your policy and looking at those areas line by line to see where you have coverage, you're potentially setting yourself up for an experience where you have a claim that's not covered. And now you have tens of thousands of dollars in damages that you are responsible for paying for out of pocket.
Why Is an Independent Insurance Broker Essential If You Live in California, Louisiana, or Another High-Risk State?
If you live in an area where it's hard to find insurance — California, Louisiana — a broker is also going to be your best friend because they have a broad overview of the insurance market generally: who's writing policies, what those policies look like, and where you're going to have the best experience. Your insurance broker stays with you, so if you buy policies through a broker and you have a claim, you reach out to your broker and they help you through that process. You as an individual may have never made a claim against your homeowner's insurance.
But an insurance broker has written thousands and thousands and thousands of homeowners policies. And so they've seen how all of these companies that they write policies for actually respond when there is a claim. This is a person that you can actually talk to — this isn't a Reddit review, this isn't a one-star Google review, this is an actual person who's had clients like you have a claim and knows what their experience was like.
So — your home is probably underinsured, you're probably missing some coverage, and you should do a review with a non-captive agent who can tell you exactly where you have risk and who can make recommendations to mitigate that exposure.
Do High Net Worth Inheritors Need Umbrella Insurance and Increased Liability Coverage?
The other area I want to talk about is liability insurance — this is the other biggest area where I see current and future inheritors have major gaps in coverage. If you have a net worth above two or three million, you need to have umbrella insurance. If you have a lower net worth but you have people working in your home or teenage drivers, you also need to add one of these policies.
When you are a person with wealth, like it or not, you also become a target. Not having enough liability insurance — whether it's umbrella insurance, which is coverage for liability that sits over everything, so it's the umbrella of liability coverage over your homeowners and over your auto policy — and/or not having enough liability coverage in either of those other areas, homeowners or auto, is a huge oversight. These policies are relatively inexpensive, and if you have a net worth in the millions, you need to have increased liability coverage to make sure that you are protected in the event of a lawsuit.
What Insurance Coverage Do High Net Worth Inheritors Actually Need in 2026?
I say it at the beginning of every episode: my goal of Heir Necessities is to give you real solutions that you can act on today. If you've listened to this whole episode and you're realizing, "Wow, I'm sure my home is underinsured, I don't have umbrella insurance, I've been with State Farm for 10 years, I've never had a claim, I don't know what to do" — then here is your solution. Send me an email at katherine@sunnybranchwealth.com and I can connect you with the insurance broker I use who can do a full risk review.
Again, this is not a sales pitch — this is a full risk review for high and ultra-high net worth clients to look at the areas of coverage that you have and where coverage should be added. Because what you don't know about insurance is that there is a whole world of insurers out there that you don't even know about, but who exist to serve high net worth clients like you. And if you're just going to State Farm, if you're just going to Geico, you're never going to see the policies and the options that these insurers have.
And these insurers — because they're writing policies for higher net worth people — you're getting better coverage, and equally important, you are getting better service, which is hugely important in the event that you actually have a claim. And you're getting this better coverage and better service, and you might not even be paying that much more when you look at it on a coverage-adjusted basis, because again, your Geico, your State Farm, whatever — they aren't built to write policies for the type of assets and for the asset level that you have. If you want to make sure that you're covered in 2026, that is my best offer.
How can I learn more about my insurance coverage?
And if you don't want to do it through me and sign on as a Sunnybranch client, that is totally fine — you can look for an independent broker in your area, ask for recommendations, and find someone who can do a full risk review and lay out everything that isn't covered in your current policy and recommend the changes that they would make. If you have any other questions on the insurance front, you can also send me an email at katherine@sunnybranchwealth.com. You can find me on Instagram @sunnybranchwealth, and if you'd rather just hang out with me here at Heir Necessities, I will catch you again on the next episode.
Let’s take the next step together
Understanding how to protect, invest, grow, and/or give away a multi-million dollar inheritance isn’t easy. Inheritors can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, reach out to Katherine Fox, CFP® and CAP®, financial planner for inheritors, to learn how Sunnybranch can help you evaluate your financial situation and build a plan for your financial future.
