What Is Property and Casualty Insurance?
Property and casualty insurance refers to a variety of insurance policies that cover you and your possessions (house, cars, valuables) if you are held liable for someone else’s property damage or someone else’s injuries.
Definition and Examples of Property and Casualty Insurance
There are two forms of insurance: P&C insurance and property insurance. Your property is protected by property insurance, while casualty insurance provides liability protection in case you inadvertently hurt someone or damage their property.
Depending on the sort of coverage you have, this type of insurance covers different situations. A homeowners insurance policy, for instance, provides liability protection in case a visitor slips and hurts themselves as well as property insurance for your home and personal items.
P&C insurance is sometimes offered in bundles, but you are not required to purchase all of the benefits they provide. For instance, you might elect to forego comprehensive and collision insurance to lower your premiums if you drive an outdated, low-value vehicle. If you wanted to, you could use your money to increase your liability insurance coverage for physical injury and property damage. Your property insurance would be canceled, while your casualty insurance would increase.
If your car is damaged in an accident, you’ll have to pay for it out of pocket, but if you’re found to be at fault, you’ll be better protected financially from having to cover the other party’s medical expenses, property damage, lost income, pain and suffering, and other expenses.
- Alternate name: P&C insurance
How Property and Casualty Insurance Works
Like other types of insurance, property, and casualty insurance functions similarly. Insurance companies will defend you against the dangers listed in your policy, up to the policy’s limitations, in exchange for payment. How likely it is that you may need to make a claim is one factor that insurers use to calculate your premium. A beachfront home in South Florida, where hurricanes are a significant concern, is probably going to cost significantly more to insure than a similar home in a place without natural catastrophes.
P&C Insurance: An Example
Say a hurricane barely missed your region. Even though your city was far from the eye’s core, the strong winds and pouring rain nonetheless had an impact. You discover that your roof and siding require some repair after the storm. Sadly, a visitor who was staying with you tripped on the way out over some debris. They require medical attention and file a lawsuit to receive reimbursement for medical expenses, which total $5,000.
You submit a claim to your homeowner’s insurance for both personal liability and property damage. The insurance adjuster estimates that the structural damage is worth $50,000. You have a particular $10,000 storm deductible, so the insurance company gives you a total of several cheques totaling $40,000 to repair the damage. Additionally, because there is no deductible for liability protection under homeowners insurance, the insurer will pay the whole $5,000 of your guest’s medical costs.
Types of Property and Casualty Insurance
Property and casualty insurance is one of many different types of insurance. The most popular ones and the types of coverage they offer are shown below:
Homeowners insurance: can shield your residence and belongings from dangers (theft, fire, storm). Additionally protects you if you are held accountable for harm to someone else’s property or guest injuries that occur on and sometimes off your property.
Condo insurance: Covers the interior of your apartment against structural damage and typically includes liability insurance similar to that of a homeowner.
Renters insurance: Provides liability protection and personal property protection on par with homeowners insurance.
Car insurance: Depending on your coverage, auto insurance can assist in several ways to safeguard you and your vehicle. The majority of states mandate specific limits of liability insurance for property damage and physical harm.
Power sports insurance: Similar to auto insurance, it offers protection for boats, ATVs, RVs, golf carts, and other vehicles.
Business insurance: guards the financial resources of your company, including its real estate and merchandise. The liability section may cover a variety of coverages, such as general liability, errors and omissions, and workers’ compensation.
Do I Need Property and Casualty Insurance?
Lenders may demand that you have specific coverages and restrictions if you have a loan against your asset. For instance, although homeowners and condo insurance are not required by law, it is certainly a requirement of your loan from your lender. Renters’ insurance may be required by your landlord as a condition of the lease to limit their liability and prevent having to make repair payments.
Nearly all states require drivers to have auto liability insurance, therefore you must have at least the minimum liability limits required by your state. You can also be required to carry full coverage, which includes liability, comprehensive, and collision coverage, by your motor loan provider.
Similar to this, your state laws could mandate that you maintain particular company insurances, such as workers’ compensation or auto insurance for cars used by the business.