Property and casualty insurance is a broad term that actually describes two types of coverage that protect you against financial losses. The property portion is insurance that protects your stuff, such as your car or home. The casualty portion covers your legal responsibility in situations where someone else suffers property damage or physical injuries.
Each portion, called a “line” by insurance professionals, includes several different types of insurance policies. Insurance carriers, the companies that develop and underwrite policies, often specialize in property and casualty insurance. But some carriers create policies in other lines like health or life as well as in property and casualty insurance.
Property insurance covers your possessions. Some common types of property insurance include:
The way property insurance coverage works is pretty simple. You buy a policy to cover something you own and pay a premium. In exchange for your premium, the insurance company promises to help you recover if something happens to the thing you insured by paying for the damage.
For example, if your home’s damaged by a peril covered by your homeowners insurance then your insurance company pays for loss so you can repair damage. Most of the time, you have a deductible (i.e., your portion of the claim) to pay, but the rest comes from your insurance company up to the coverage limits.
Some property insurance policies also have a liability section that covers casualty claims, or claims dealing your responsibility for another party’s injuries or damages. Homeowners insurance is a good example of this. It includes several property coverage sections, such as dwelling, other structures, and even personal property. But it also has personal liability coverage. This is why property and casualty insurance is often treated as one line of insurance.
Casualty insurance covers your responsibility if you harm someone else, either by causing them actual bodily injury or by damaging their possessions. That harm may result in a financial loss for the person you injured, and they have a right to seek compensation from you. If that happens, your casualty insurance helps you cover the cost.
For example, let’s assume your dog bites a neighbor, and you end up being legally responsible for the neighbor’s medical bills. The casualty, or liability, portion of your homeowners insurance most likely covers the claim. Generally, there is no deductible on liability claims.
Figuring out how much property and casualty insurance you need to cover your home isn’t necessarily easy, but it is something you can tackle on your own. (We even have a guide to walk you through the basics!)
Start by determining what it would cost to replace your home in a total loss. Anything less than its replacement cost, and you risk coming up short during claim. Other property coverages are usually a percentage of your dwelling coverage. As for personal liability, we typically recommend homeowners have at least $100,000 in coverage, but that may go up depending on your situation. Last is your medical payments coverage, which is usually around $1,000.
Still have questions? Contact us and one of our insurance representatives will be happy to help.