What is Property and Casualty Insurance?
Property and casualty insurance is an umbrella term that includes many types of insurance policies.
Today, we’re explaining everything you need to know about property and casualty insurance, including why auto insurance is considered a type of property and casualty insurance.
What is Property and Casualty Insurance?
Property and casualty insurance consists of two primary coverage types, including liability coverage and property protection coverage.
Property Protection Coverage: Property insurance covers your home, car, or other property. It covers certain things you own.
Liability Coverage: Liability coverage covers you against damages for which you may be liable. It could cover the cost of another driver’s medical bills after a car accident you caused, for example. Or, with a home insurance policy, liability insurance covers the medical bills of someone injured on your property.
Together, these two items make up property and casualty insurance.
Yes, Auto Insurance is a Type of Property and Casualty Insurance
Auto insurance is a type of property and casualty insurance. Auto insurance covers your property (your vehicle). It also covers your liability (any damage you cause to other vehicles or people while driving).
Most auto insurance policies consist of four basic components:
Property Damage Liability Coverage: Property damage liability coverage covers any damage to someone else’s property for which you may be liable. If you crashed into someone’s vehicle, for example, then your property damage liability coverage would cover the cost of repairing that vehicle. If you drove through a neighbor’s fence, then car insurance would cover the cost of repairing that fence.
Bodily Injury Liability Coverage: Bodily injury liability coverage covers damage to other people. If you hit a pedestrian while driving, for example, then your car insurance’s bodily injury liability coverage could cover the pedestrian’s medical bills.
Collision Coverage: Collision coverage covers the cost of repairing or replacing your own vehicle after an accident. It’s optional in every state.
Comprehensive Coverage: Comprehensive coverage covers the cost of repairing or replacing your vehicle after theft, vandalism, environmental damage, and other non-accident-related incidents. It’s also optional in every state.
Every state in America (except for New Hampshire and Virginia) requires drivers to have bodily injury and property damage liability coverage. If you have car insurance in the United States, then you have property damage and bodily injury liability coverage.
Bodily injury and property damage liability coverage make up the casualty of ‘property and casualty’ insurance. These policies cover damage for which you may be liable. You caused the damage, so you have to pay to repair that damage.
Meanwhile, collision and comprehensive coverage protect your property. This is the property part of ‘property and casualty’ insurance.
What Types of Policies Are Considered P&C Insurance?
Property and casualty insurance is a term that covers a broad range of policies. Some of the policies that fall under the P&C insurance umbrella include:
Car Insurance: Car insurance protects damage to your property (your vehicle) and covers your liability (casualty) after an accident.
Condo Insurance: Condo insurance covers your property (the condo) and covers your liability (casualty) if someone gets injured on your property.
Homeowners Insurance: Homeowners insurance covers damage to your home. It also covers liability if someone gets injured on your property.
Renters Insurance: Renters insurance, also known as contents coverage, protects your personal property if it’s damaged or stolen. Renters insurance also includes liability coverage for certain injuries and/or damages for which you may be considered liable or negligent.
Special Lines Insurance: Special lines insurance policies are intended for motorcycles, boats, golf carts, and RVs, among other types of property. This insurance also includes liability coverage for damage you cause to others – just like car insurance.
These policies have similarities: they all broadly cover your property and liability in certain situations. However, they differ widely in terms of coverage.
When Am I Liable for Damages?
If you harm someone else with your vehicle, then that person may make a claim through your car insurance liability coverage. We buy property and casualty insurance to protect ourselves – and our property – from certain situations.
Here are some of the situations where you may be liable for damages and forced to use your property and casualty coverage:
- You are in a car accident and considered at-fault (say, you rear-ended someone, were speeding or were intoxicated)
- Someone gets injured on your property
- You failed to act with reasonable care under the circumstances, and by failing to act reasonably, you caused damage to someone else or to someone else’s property
In all of these situations, you may be considered negligent. You acted – or failed to act. Because of that, someone else was injured – or someone else’s property was damaged. You will be required to pay.
Liability coverage will cover damage up to the limits of your policy. After that, you may be personally liable for any further damages, which means you may be required to pay additional compensation out of pocket.
Property and casualty insurance, also known as P&C, is an umbrella term for multiple types of insurance policies. Homeowners and renters insurance policies are considered property and casualty insurance, for example, as is auto insurance.
The ‘property’ part of P&C insurance covers your property: insurance will reimburse you for a car or house that’s damaged in a covered incident.
The ‘casualty’ part of P&C insurance, meanwhile, covers your liability. If you injure someone, or if someone gets injured on your property, then your liability insurance will cover certain expenses.