How do I know if the contents of my home are properly insured?

Personal Property consists of the contents of your home and other personal belongings that are owned by you and family members living with you.  We typically think of these items like furniture and appliances, but it also pertains to jewelry, antiques, art, entertainment equipment, etc. The personal property section of your homeowner’s insurance policy covers these items no matter where the item is located at the time of the loss. However, the coverage under the policy is limited to actual cash value which is different than replacement cost which is found in the main dwelling section of your policy.  We cover replacement cost in our article titled “Property and Casualty Insurance: The Basics”. Actual cash value is the cost of the property minus depreciation.  Depreciation can be thought of as normal wear and tear.  Therefore, there is potential for financial loss, especially on those sentimental/specialty property items such as jewelry, or antiques that have a higher value than the actual cash value covered in the policy. This is where an endorsement can be used to supplement the potential loss of these items.

Since coverage in the personal property section of a homeowner’s policy is limited in the event of a loss, an endorsement should be used to supplement the property that has been valued higher than the actual cash value.  A schedule is attached to the homeowner’s policy, lists the specific items, and has the value for each item. The values are agreed upon between the insured and the insurance company, with some items needing to have a separate valuation to support the replacement value requested. The deductible is waived for separately scheduled items in the event of a loss.

https://www.allstate.com/resources/home-insurance/what-is-an-insurance-rider

Do I need more liability coverage than provided by my homeowner’s policy?

Liability insurance under the homeowner’s policy covers the insured and all resident family members. If someone brings a claim against you stating that they have been hurt or that their property was damaged by something you did or did not do, you will be covered under liability insurance.  The coverage is subject to a limit per occurrence and will vary between states and policies. The insurance company will provide and pay for all legal and any settlement costs if a dispute were to arise.  It is a good practice to review this section to ensure that this coverage is sufficient or if a Personal Liability Umbrella Policy (PLUP) should be used to supplement the policy.

A Personal Liability Umbrella Policy (PLUP) is additional property and casualty insurance that may be recommended by your financial advisor depending on your financial situation.  A PLUP will cover an amount above your homeowners and auto insurance limits. A PLUP will typically start coverage at $1 million, purchased in increments of $1 million and has a relatively low cost.  The following link to Kiplinger.com is a great resource to help get an idea of how much coverage may be needed given a certain level of assets.

While a Santa rally did not occur, market performance in the final quarter of 2022 was mostly positive for both stocks and bonds. The Fed remained hawkish and increased its Fed Funds rate by 125bps during Q4 to an upper bound of 4.5%. The labor market continued to prove resilient in the face of inflation. More jobs were added to the U.S. economy than were expected over the last four months and the unemployment rate dropped to 3.5% in December. Inflation remained elevated at 7.1% year-over-year, but has shown some signs of cooling in recent months.

2022 has been a historic year in many ways. Still recovering from post-pandemic supply/demand imbalances, the global landscape shifted dramatically in February when Russia invaded Ukraine. Accelerating global inflation followed, spurring aggressive shifts in central bank policy. The U.S. Federal Reserve has raised interest rates this year at a faster pace than any time in recorded history. Markets for both stocks and bonds are set to deliver double digit negative returns in a calendar year for the first time since the major indices were formed.

Looking at the data, one might conclude this was an unusual year for markets. Taking a step back, we argue that while the pace and magnitude of the events of 2022 were historic, the market environment over the previous decade was more unusual.

In this letter, Pathstone’s Chief Investment Office will examine the outlook for markets and the economy and how investors should think about the navigating a bumpy road back to a more “normal” environment of elevated interest rates, credit spreads, and subdued equity valuations. We will offer our insights on how the macro environment unveils opportunities and risks across liquid and private markets that we have not seen in the prior 13+ years of artificially low interest rates. While we believe there will be further bumps and twists in the road in 2023, successful long-term investors will be prepared to look out for on-ramps to the highway where opportunities for smoother returns will emerge.

—Alex Hart, CFA, Executive Managing Director, Chief Investment Office

Table of Contents

• Investment Strategy Without Training Wheels
• Global Equities – Tuning Up for a Road Trip
• Alternatives – A Regime Shift from Macro to Micro
• Private Markets – Private Investments Dampen Shocks
• Portfolio Management Strategies – Autopilot Not Ready Yet