What is Property and Casualty Insurance?
Last Updated on May 12, 2020
Car insurance is a type of property and casualty insurance. It covers certain aspects of your property (your vehicle) and your liability (casualty).
Also known as P&C insurance, property and casualty insurance can get confusing. However, P&C insurance plays a crucial role in your life.
P&C insurance is all around you. Homeowners insurance, car insurance, condo insurance, renters insurance, and other insurance products are all considered property and casualty insurance.
How Does Property and Casualty Insurance Work?
Property and casualty insurance are types of coverage that protect you and the property you own. You buy P&C insurance to cover your home and your vehicle, for example. Property insurance compensates you for the value of your property in the event of a loss. It can also cover the cost of repairing your property to pre-loss condition.
You also buy P&C insurance to cover your liability – say, if you injure someone with your vehicle, or if someone injures themselves on your property. The ‘casualty’ part of property and casualty insurance protects you when you are responsible for someone else’s injuries.
Types of Property & Casualty Insurance
Property and casualty insurance is all around us. Common types of property and casualty insurance include:
Homeowners Insurance: Homeowners insurance protects you home and your belongings (your property) against covered perils like theft, water damage, fire, vandalism, and more. Homeowners insurance also covers liability. If someone gets injured on your property, then you may be liable (legally responsible) for that person’s medical bills and other losses. Homeowners insurance covers this liability, compensating you for any potential losses related to liability.
Auto Insurance: Auto insurance is another common type of property and casualty insurance. Auto insurance protects your vehicle (your property) in multiple ways. If you have collision coverage, then auto insurance covers the cost of repairing or replacing your vehicle after an accident. If you have comprehensive coverage, then auto insurance covers the cost of repairing or replacing your vehicle after non-accident-related events, including theft, vandalism, hail damage, and more. Auto insurance also includes casualty coverage. If you injure someone while driving and are found liable (at-fault), then you must pay the other driver’s medical bills and other losses. Your auto insurance liability coverage will cover you up to the limits of your policy.
Other Insurance: Condo insurance, renters insurance, landlord insurance, boat insurance, ATV insurance, and other types of insurance policies are all common examples of property and casualty insurance coverage.
How Does Property Insurance Work?
Broadly speaking, property insurance covers anything you own. It covers your “property”. Specific insurance policies cover different types of policies. ATV insurance covers your ATV, for example, while homeowners insurance covers your home and most things inside that home. Renters insurance covers your personal property.
The goal of property insurance is to protect you from losses or damages. In the event of a covered loss, property insurance will make you whole again. Property insurance will cover the cost of repairing your property to pre-loss condition. Or, it will compensate you for the value of that property in a total loss.
Property insurance can cover:
- Vehicle repairs
- Property replacements
- Theft
- Home repairs
- Car replacement
If someone breaks into your vehicle, for example, then you might request a claim through two types of property insurance. You might make an auto insurance claim for your broken glass, for example. Insurance will pay to make your vehicle whole again, covering the cost of repairing your broken glass. You might also file a claim through your renters or homeowners insurance for any property that was stolen – like a laptop stolen from your trunk.
How Does Casualty Insurance Work?
Casualty insurance is another broad term that refers to multiple types of insurance. Broadly, casualty insurance covers your legal responsibility for someone else’s damages. If you damaged another person’s property (say, in a car accident), or if someone gets injured at your home, then your casualty insurance will cover the cost of making this person whole again.
Casualty insurance can cover:
- Lost wages
- Medical bills
- Loss of use
- Pain and suffering
Let’s say someone is walking up your front steps in the winter. That person slips on the ice and falls, breaking their leg. You are found to be negligent because you failed to shovel the steps or put salt on the ice to melt it. Because you are negligent, you are liable for that person’s injuries. That means you are required to pay that person’s medical bills, cover their pain and suffering, and pay other costs.
If you have homeowners insurance, then the ‘casualty’ part of your homeowners insurance policy will cover these costs. If you do not have homeowners insurance, then you will need to pay these costs out of pocket.
Final Word on Property and Casualty Insurance
Property and casualty insurance covers any damage or losses to your property (through property coverage). It also covers any of your personal liability (through casualty coverage).
Auto insurance is a type of property and casualty insurance, as are homeowners and renters insurance.
If you experience a loss, or if you injure someone else through your own negligence (like through an at-fault car accident), then you can make a claim through your property and casualty insurance policy.
