Clarifying Coverage: Navigating the Complexities of Insurance with Karl Susman

Published Date: 05/14/2024

Clarifying Coverage: Navigating the Complexities of Insurance with Karl Susman

In an age where insurance headlines often center on cancellations, premium hikes, and disappearing carriers, one voice continues to remind Californians of something fundamental: insurance, at its core, is a contract of protection.

In a recent episode of Insurance Hour, host and independent broker Karl Susman unpacked the maze of modern coverage — from homeowners and auto insurance to the evolving world of health and long-term care. His message was clear: consumers and professionals alike need to understand what their policy actually says, not just what they think it covers.

This educational deep dive offers clarity amid the confusion, exploring what Susman calls “the real insurance education gap.”

1. Why Understanding Coverage Matters More Than Ever

Susman began the conversation by addressing a trend he sees daily: policyholders assuming their insurance works one way, only to discover too late that it doesn’t.

“Insurance is not one-size-fits-all,” Susman explained. “It’s customized, it’s contractual, and it’s only as good as what’s written on that page.”

He emphasized that many consumers buy policies based solely on price — a risky strategy in today’s market. With rates rising and coverage shrinking, comparing policies only by premium can lead to dangerous misunderstandings.

“The cheapest policy is cheap for a reason,” he said. “It may exclude water damage, wind damage, or limit your roof coverage. That fine print is where your real protection lives.”

2. The Erosion of Comprehensive Coverage

One of Susman’s strongest insights centered on the slow but steady erosion of what used to be called “comprehensive” coverage.

In both homeowners and auto insurance, the term has become more of a marketing shorthand than a guarantee. Comprehensive once implied broad protection against nearly all perils — today, it often means “coverage for everything except what’s excluded,” and those exclusions keep expanding.

“When I started in this business, policies were broader,” Susman said. “Now, every few years, we see new limitations — especially in property insurance. Carriers have rewritten policies to protect themselves against climate exposure and litigation risk.”

For example, some modern homeowners policies exclude smoke damage unless it’s tied to a direct wildfire event. Others cap water loss payouts, or exclude older roofs altogether.

This narrowing of coverage, Susman warned, demands a new level of vigilance from policyholders — and transparency from insurers.

3. Auto Insurance: More Than Just Liability

Switching to auto insurance, Susman underscored a persistent public misconception: many drivers don’t realize what “full coverage” actually means.

“There’s no such thing as ‘full coverage’,” he clarified. “People use that phrase all the time, but what they usually have is liability plus comprehensive and collision. That’s not full — it just means you’re covering your own car and the other driver’s damage.”

He went on to note that in California, liability minimums haven’t kept up with inflation or medical costs, leaving even well-intentioned drivers exposed.

For example, California’s state minimum liability limit — long set at $15,000 per person / $30,000 per accident — barely scratches the surface of most injury claims. A single hospital stay can exceed that amount.

“If you cause an accident and someone’s seriously injured, that $15,000 is gone before the ambulance even arrives,” Susman cautioned. “People don’t realize they’re personally responsible for anything above their limit.”

His advice? Increase liability coverage and consider an umbrella policy — especially for homeowners, parents of teenage drivers, and professionals with assets to protect.

4. The Shifting Ground of Homeowners Coverage

Homeowners insurance, Susman noted, has become the most volatile segment of California’s market, driven by wildfire risk, regulatory gridlock, and the growing role of the California FAIR Plan.

“I get calls every day from people saying, ‘My insurance doubled, or I got non-renewed — what do I do?’”

Susman’s answer starts with understanding the difference between replacement cost and actual cash value, as well as the importance of reviewing policy exclusions annually.

He explained that many consumers fail to realize their policy may not cover indirect smoke damage, code upgrades, or loss of use beyond a certain limit.

“If your home is uninhabitable for six months, will your policy pay for a rental? If so, for how long? These are the questions you need to ask before disaster strikes.”

In high-risk regions, many Californians are being forced into the FAIR Plan — the state’s insurer of last resort. While it provides fire coverage, homeowners must buy wraparound policies for water, theft, and liability protection.

“FAIR Plan is fire only,” Susman stressed. “Too many people think it’s full homeowners insurance, and it’s not.”

5. Health and Long-Term Care Insurance: A Parallel Crisis

While most of Susman’s work focuses on property and casualty lines, he drew striking parallels with the health insurance system.

Like homeowners insurance, health coverage has become increasingly complex, fragmented, and dependent on fine print. Deductibles have risen, networks have narrowed, and even those who “have insurance” often find their real costs unpredictable.

“It’s the same problem across all types of insurance,” Susman said. “People assume they’re covered — until they’re not. The system has shifted the burden of understanding onto the consumer.”

He also addressed the rising importance of long-term care insurance, which covers in-home or facility-based assistance for seniors.

“The cost of care is going up faster than inflation,” he noted. “If you think Medicare will handle it, it won’t. Planning ahead — and buying early — is key.”

6. Bridging the Knowledge Gap

A recurring theme throughout the episode was education — or rather, the lack of it.

Susman pointed out that most Americans learn more about buying a car than buying insurance, even though both involve long-term financial commitments.

“People get licenses to drive, but not to own insurance,” he joked. “Yet one mistake in coverage can cost more than a car accident ever will.”

He advocated for stronger insurance literacy initiatives — not just for consumers, but for policymakers who often misunderstand how rate filings, risk modeling, and reinsurance interact.

“We need regulators, agents, and the public to be on the same page,” Susman said. “Right now, too much of the conversation is emotional — not educational.”

7. How Regulation Shapes Risk

California’s regulatory structure — especially Proposition 103 — continues to shape the conversation around both affordability and availability.

Susman carefully framed the issue: while the law was designed to protect consumers from unfair pricing, it has created a slow, unpredictable approval process for insurers. That delay, he argued, discourages companies from writing new business or updating products to reflect current realities.

“It’s not just about rates being too high,” Susman explained. “It’s about companies not being able to get approvals fast enough to stay solvent in a high-risk market.”

The result: fewer choices for consumers, higher FAIR Plan enrollment, and mounting frustration among homeowners and agents alike.

Susman’s takeaway was pragmatic, not political:

“We can’t insure the state effectively if we don’t let pricing reflect risk. The goal should be stability — not just regulation for regulation’s sake.”

8. The Path Forward: Education, Transparency, and Balance

As Insurance Hour drew to a close, Susman returned to the theme that defines his work — empowerment through understanding.

“When people understand what they’re buying, they make better choices. And when regulators and companies communicate clearly, everyone benefits.”

He called for a more balanced insurance ecosystem — one that maintains consumer protection while allowing insurers the flexibility to innovate and price fairly.

That means embracing better risk modeling, encouraging mitigation efforts, and improving communication between the public, carriers, and state regulators.

“The market can recover,” Susman concluded, “but only if we rebuild trust — and that starts with clarity.”

Final Thoughts

The Insurance Hour episode “Clarifying Coverage” stands as more than an educational broadcast. It’s a reflection of the broader crisis — and opportunity — facing the insurance industry today.

Consumers, regulators, and insurers all share responsibility for fixing what’s broken. But as Karl Susman’s insights remind us, the first step isn’t reforming the system — it’s understanding it.

Because in the end, insurance isn’t just about paying claims. It’s about confidence, communication, and the promise that — when the unexpected happens — someone has your back.