Property and casualty insurance describes various insurance products that protect your assets (home, belongings, cars) and you when you’re legally responsible for damages to someone else’s property or another person’s injuries.
Definition and Examples of Property and Casualty Insurance
Property and casualty (P&C) insurance are two types of insurance. The property insurance side protects your personal property, while the casualty part offers liability coverage when you accidentally hurt someone or damage their property.
The instances this type of insurance covers depends on the type of policy you have. For example, a homeowners insurance policy offers property insurance for your dwelling and personal belongings, and liability insurance if a guest trips on your stoop and is injured.
How Property and Casualty Insurance Works
Property and casualty insurance works like other types of insurance. In exchange for a premium, insurers protect you from risks specified in your policy, up to your policy’s limits. Part of the way insurers determine your premium is how likely you are to need to file a claim. Insurance for a coastal house in South Florida, where hurricanes are a major risk, is likely to cost much more than the same home in a state without natural disasters.
P&C Insurance: An Example
Say a hurricane grazed your area. Your city was far from the eye’s center, but the winds and pounding rain still took their toll. After the storm passes, you notice part of your roof and siding need repair. And unfortunately, a guest who was staying with you trips 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.
Do I Need Property and Casualty Insurance?
If you have a loan on your asset, lenders may require you to have certain coverages and limits. For example, homeowners and condo insurance aren’t mandated by law, but your lender likely requires specific levels of coverage as a condition of your loan. Landlords may ask you to have renters insurance as a condition of the lease to reduce their liabilities and avoid having to pay for damages.
Types of Property and Casualty Insurance
You can find property and casualty insurance under various types of insurance. Here are some of the most common ones and the types of coverage they provide:
- Homeowners insurance: Can protect your house and possessions against perils (theft, fire, storm). Also covers you when you’re legally responsible for damage to someone else’s property or guest injuries that occur on and sometimes off your property.
- Condo insurance: Protects your unit’s interior when there’s structural damage and usually includes liability insurance similar to homeowners insurance.
- Renters insurance: Protects your personal belongings and provides liability coverage similar to homeowners insurance.
- Car insurance: Helps protect you and your car in a few ways, depending on your coverage. Most states require certain amounts of bodily injury and property damage liability coverage.
- Power sports insurance: Protects boats, all-terrain vehicles (ATVs), recreational vehicles (RVs), golf carts, and other vehicles similarly to car insurance.
- Business insurance: Protects your business’s assets, such as its buildings and personal property like equipment and inventory. Various types of coverage may fall under the liability portion, including workers’ compensation, errors and omissions, and general liability.