Understanding Your Insurance Coverage in Today’s Market

Published Date: 05/14/2024

In an age where insurance headlines often focus on cancellations, premium hikes, and disappearing carriers, one message deserves renewed attention: insurance, at its core, is a contract of protection.



In a recent episode of Insurance Hour, host and independent broker Karl Susman explored the growing complexity of modern insurance — from homeowners and auto coverage to health and long-term care. His central message was clear: consumers and professionals alike must understand what their policies actually say, not just what they assume they cover.

This educational deep dive exposes what Susman calls the modern insurance education gap and explains why clarity has never mattered more.

Why Understanding Coverage Matters More Than Ever

Susman opened the discussion with a reality he sees daily: policyholders assume their insurance works one way, only to discover too late that it doesn’t.

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

Many consumers still shop almost entirely on price. In today’s restrictive market, that approach is increasingly dangerous. Lower premiums often come with narrower coverage, higher deductibles, and critical exclusions that only surface after a loss.

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

The Erosion of Comprehensive Coverage

One of Susman’s most important observations is how traditional “comprehensive” coverage has steadily eroded over time.

When he began his career, homeowners and auto policies were far broader. Today, carriers continue to rewrite contracts to limit exposure to climate risk, litigation, and rising claim severity.

“When I started in this business, policies were broader,” he said. “Now, every few years, we see new limitations — especially in property insurance.”

Modern homeowners policies may exclude indirect smoke damage, cap water loss payouts, restrict roof coverage by age, or add sub-limits for debris removal and code upgrades. What once felt automatic now requires verification.

This narrowing of protection, Susman emphasized, makes regular policy reviews essential.

Auto Insurance Is More Than Just Liability

Auto coverage remains one of the most misunderstood insurance products, largely due to the persistent myth of “full coverage.”

“There’s no such thing as ‘full coverage’,” Susman clarified. “What people usually mean 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.”

In California, outdated liability minimums compound the problem. The long-standing $15,000 per person and $30,000 per accident limits rarely come close to covering modern medical costs.

“If you cause an accident and someone’s seriously injured, that $15,000 is gone before the ambulance even arrives,” Susman warned. “Anything above that is your personal responsibility.”

His guidance is consistent: increase liability limits and consider an umbrella policy, especially for homeowners, parents of teen drivers, and anyone with meaningful assets.

The Shifting Ground of Homeowners Insurance

Homeowners insurance has become the most volatile segment of California’s insurance market, driven by wildfire risk, carrier withdrawals, and expanding reliance on the FAIR Plan.

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

He stressed the importance of understanding replacement cost versus actual cash value, loss-of-use limitations, and code-upgrade coverage. Many homeowners don’t realize what their policy will and won’t pay for after a major loss.

“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.”

For those forced into the FAIR Plan, the misunderstandings are even more severe.

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

Without a companion Difference in Conditions policy, homeowners remain exposed to water, theft, and liability losses.

Health and Long-Term Care Insurance: A Parallel Crisis

Susman drew direct parallels between property insurance and the health insurance system. In both, consumers often believe they are well protected — until they confront deductibles, network restrictions, and uncovered services.

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

Long-term care insurance, in particular, represents a growing blind spot. With the cost of assisted living and in-home care rising faster than inflation, relying on Medicare alone is a costly misconception.

“If you think Medicare will handle it, it won’t,” Susman said. “Planning ahead — and buying early — is key.”

Bridging the Insurance Knowledge Gap

Education emerged as the central theme of the episode. Susman noted that most Americans receive formal instruction on driving but almost none on owning insurance — despite the long-term financial consequences of coverage decisions.

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

He called for broader insurance literacy — not just for consumers, but also for policymakers and community leaders who shape regulations without always understanding how risk, reinsurance, and pricing interact.

“Right now, too much of the conversation is emotional — not educational,” he said.

How Regulation Shapes Risk and Availability

California’s regulatory framework, especially Proposition 103, continues to shape both affordability and availability across the insurance market.

While designed to protect consumers from unfair pricing, Susman explained that slow and unpredictable approvals now discourage carriers from writing new business or updating products fast enough to keep pace with modern risk.

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

The result is fewer choices, rising FAIR Plan enrollment, and mounting frustration among homeowners and agents.

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

The Path Forward: Education, Transparency, and Balance

As the episode closed, Susman returned to the core of his philosophy: informed consumers make better decisions, and transparent systems create healthier markets.

“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 preserves consumer protections while allowing insurers to adapt to climate risk, litigation, and rising claims costs. That balance depends on modern risk modeling, meaningful mitigation incentives, and consistent communication.

“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” goes far beyond a standard consumer discussion. It reflects the broader crisis — and opportunity — now facing the insurance industry.

Consumers, regulators, and insurers all share responsibility for what comes next. But as Karl Susman’s insights repeatedly demonstrate, the first step toward reform is not legislation or restructuring — it is understanding.

Because at the end of the day, insurance is not just about paying claims. It is about confidence, communication, and the promise that when the unexpected happens, someone truly has your back.