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. P&C insurance is often sold together, although you don’t always have to buy all the protections they offer. For example, if you have an old car that’s not worth much, you may decide to reduce your premiums by opting out of comprehensive and collision insurance. If you wanted to, you could use your savings to beef up your bodily injury and property damage liability coverage. This would eliminate your property insurance while boosting your casualty insurance. You’d have to pay out of pocket for any damage to your car after an accident, but you’d be better financially protected from paying the other party’s medical bills, property damage, lost wages, pain and suffering, and other costs if you’re legally liable.
Alternate name: P&C insurance
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. You file a claim with your home insurance for both your property damage and personal liability. The insurance adjuster determines there’s $50,000 worth of structural damage. You have a special $10,000 hurricane deductible, so the insurer reimburses you $40,000 to fix the damage, spread out over a series of checks. And because homeowners insurance doesn’t have a deductible for liability coverage, the insurer covers the full $5,000 of your guest’s medical expenses.
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.
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. Auto liability insurance is mandatory in nearly all states, so you must carry at least your state’s minimum liability limits. Your auto loan lender may also require you to have full coverage, which includes liability, comprehensive, and collision coverage. Similarly, your state laws may require you to have specific business insurances, such as workers’ compensation or auto insurance for cars used by the business.
