What is casualty and property insurance?

Property and casualty insurance is a broad insurance, which includes coverage to your structure, property and belongings in the event of vandalism, theft, and more. If a thief were to break into your home, you would be protected up to your covered limits under your homeowners insurance policy.

Property and casualty (P&C) insurers are companies that provide coverage on assets (e.g., house, car, etc.) and also liability insurance for accidents, injuries, and damage to other people or their belongings.

Outlined in the Canadian Institute of Actuaries, property and casualty insurers focus on risks that result in losses to property and possessions. Examples include:

The following are several scenarios in which property and casualty insurance provide coverage:

Josh, an insured individual, forgets to shovel his front yard after a snowy day and causes a stranger to fall and fracture their leg. The property and casualty insurer can help John cover the medical costs related to the stranger, as well as damages for pain and suffering.

Tim, an insured individual, comes home to find his property vandalized. The property and casualty insurer can help Tim cover the cost related to repairing the damage done to the property.

Dan, an insured individual, lives in Florida, and his property was damaged due to a hurricane recently. The property and casualty insurer can help Dan cover the costs related to damage to the property.

Property and casualty insurers offer insurance to customers for risks, up to a certain coverage amount, in exchange for insurance premiums. Insurance premiums are cash outflows made by the customer in exchange for insurance coverage.

Similar to other insurers, when property and casualty insurers offer coverage to a customer, they must determine an insurance premium the customer will pay by looking at the riskiness of the customer. An insurer would commonly look at the likelihood of the customer making a claim and the potential amount of the claim when calculating the amount of insurance premium they should charge. A diagram is provided below to outline the process:

Property and casualty insurance can be purchased by an individual to protect personal assets from damage or depletion as a result of a third party liability claim. Businesses can also purchase property and casualty insurance for the same reasons. By definition, certain types of policies, such as life or health insurance, are not considered property and casualty insurance.

Property and casualty (P&C) insurance isn’t a single type of insurance. It’s an umbrella term that describes many types of insurance policies, including auto, homeowners, renters and condo insurance. As the name suggests, P&C insurance contains two parts — property coverage and casualty coverage:

Although property coverage and casualty coverage are technically different types of insurance, they aren’t sold separately because most common insurance policies bundle them together. Even the most basic homeowners, auto and renters insurance policies include both property and casualty coverage.

There are many types of insurance that fall under the P&C insurance umbrella. All of these policies include personal property and liability coverage.

Car insurance covers the damages to your vehicle after an accident. If your car is stolen, your insurance will help you pay for a replacement. It also covers your liabilities as a driver. If you hit another car, your liability insurance will help pay for the other driver’s damages, including vehicle repairs and medical expenses.

Home insurance financially protects the personal items inside your home, like clothing and furniture — as well as the home’s structure itself, from common perils. For example, if your entire wardrobe was destroyed in a fire, your personal property coverage would help cover the cost for new clothes. Home insurance also covers liabilities. If a guest was injured on your property and you were found responsible, your legal fees would be covered up to the policy limits.

Condo insurance is similar to home insurance in that it covers your personal items as well as liability to others. Condo insurance also covers damage to your condo unit. However, because of the unique ownership arrangement, a master policy purchased by the condo association covers damage to the building itself while condo insurance has limited coverage for the interior walls and improvements to the condo, not covered by the master policy.

Like home insurance, renters insurance also covers your personal property and liabilities. If an electrical fire burns some of your furniture, your insurance policy will help you replace the damaged items with new ones. The same goes for liability. If you accidentally damage someone’s property and they decide to sue you, the casualty portion of your renters insurance will pay for the cost. Unlike condo or home insurance, renters insurance policies do not cover damage to the exterior or interior of the dwelling.

Landlord insurance is another common type of P&C insurance. The property portion of landlord insurance covers the building itself. If a windstorm damages the roof of an apartment building you own, you could file an insurance claim to finance the repairs. It also covers your liabilities if a tenant gets injured on the property and it’s your fault.

Businesses purchase property and casualty insurance for the same reason as individuals. The business insurance policy provides financial protection for damage and losses to the business property and assets. Casualty coverage is typically broader and protects against claims from third parties injured on the premises but also for damages caused away from the business facilities by company products or services performed. Additionally, such policies may also include unique protections for a business such as business interruption coverage.

If you have a boat, ATV, golf cart or snowmobile, this type of policy can be beneficial. Power sports insurance policies cover the cost of repairs to your vehicle from damages, and provide financial liability coverage for the operator. For instance, if you accidentally rode your snowmobile through someone’s backyard fence, the casualty portion of your power sports insurance would pay for the repairs.

Umbrella insurance is a broad form of liability coverage that extends your limits of casualty coverage and is applicable to both personal and business coverage. Umbrella coverage can be an important part of any insurance plan particularly in modern society with increasingly unpredictable lawsuits with large damage claims. Normal limits don’t always come close to addressing this risk, but for an additional cost, you can raise limits on all phases of your liability coverage with an umbrella policy.

P&C insurance works like any other type of insurance. If your personal property is damaged or destroyed by a covered peril, you can file a claim with your insurance company to get reimbursed for the losses. The same goes for liability claims, where someone is suing you for damages, and is seeking compensation for their losses.

In either scenario, you are only covered up to your policy’s property limit and casualty limit. For example, if your house burns down and you lose everything you own, you will only be compensated for the losses up to your policy’s personal property coverage limit. Valuables and electronics are usually subject to specific coverage limits, which tend to be low.

When you purchase any type of P&C insurance, make sure your coverage limits are appropriate for your situation. For instance, if you have $200,000 worth of belongings in your home, your coverage limit should match that. If your coverage limit is too low, you risk paying money out-of-pocket towards a loss.

Property insurance covers your assets and belongings. Casualty insurance covers your liabilities as a homeowner, renter or driver.

Property and casualty insurance refers to types of coverage that protect the things you own (like your home, car, and other belongings, or even your pets). These insurances also include liability coverage. This helps protect you if you’re found legally responsible for an accident that causes injuries to another person or damages to their property.

Types of P&C insurance are homeowners insurance, condo insurance, co-op insurance, HO4 insurance, liability insurance, pet insurance, and car insurance.

P&C insurance does not include other types of insurance coverage such as life insurance, health insurance, and fire insurance.

Let’s take a closer look at what you should know about property and casualty insurance:

Broadly speaking, property insurance refers to your personal belongings ie. stuff you own.  Casualty insurance, meanwhile, covers your legal responsibility for losses stemming from damage to another’s property or injury to another person. In homeowners and renters insurance, you’ll find this type of coverage in your liability coverage amounts of your policy.

Casualty insurance is a common insurance policy for small business owners since it protects a company from liabilities in the situation that a worker is hurt on company property.

There are seven major categories of property and casualty insurance.

Additionally, businesses rely on property and casualty insurance to protect business property against covered perils like vandalism, theft, and natural disasters. Businesses’ casualty coverage can help protect them from liabilities in case a worker is hurt on company property, and can help cover workers’ compensation expenses.

Depending on the type of insurance policy you hold, property insurance can be defined differently. For example, in a renters or homeowners insurance policy, your property is referred to as personal property. In the policy it’s referred to as Coverage C, and it applies to your stuff in the event of a covered loss. Homeowners policies also cover the cost of rebuilding your home of it’s destroyed by a covered loss.

Should your home become unlivable, your loss of use coverage will pay for extra expenses you incur while you’re staying away from home.

Finally, the “casualty” part of insurance can help cover your liability for others’ medical payments and legal fees if you’re sued by someone who gets injured on your property.

The level of coverage you’ll need hinges on what type of policy you have and a range of factors unique to your individual circumstance.

If you’re a homeowner, for instance, you’ll want to make sure your reconstruction cost coverage is enough to rebuild your home. Homeowners and renters should select a personal property coverage amount that reflects the value of their personal belongings (furniture, clothes, keepsakes, and so on), and they may need to purchase Extra Coverage to protect especially valuable items, like jewelry, high-end art, bicycles, and more.

What you’ll pay for property and casualty insurance depends on the specific policy you hold, where you live, your deductible, your claims history, larger economic trends, and more. That said, the average cost of a renters insurance policy in the U.S. is $15.50 per month, or $186 per year. Meanwhile, the average cost of a homeowners insurance policy is $140 per month, or $1,680 annually.

Lemonade offers renters insurance starting as low as $5 per month and homeowners insurance starting at $25 monthly.

Property and casualty insurance, more commonly known as P&C insurance, is a broad term for the type of coverage that protects both your property (such as your home or car) and the things you're found legally responsible for (such as damage you may cause to someone else's property). Property and casualty insurance can help protect you from financial losses due to unexpected events such as fire, theft, storms, or accidents.

The "property" part of P&C insurance refers to the coverage of tangible items from physical damage or loss. For example, if your house catches on fire or is damaged by a storm, property insurance would cover the cost of repairs.

The "casualty" portion of P&C insurance refers to liability coverage for the harm or damage caused to others. For example, if you are driving your car and accidentally hit someone else’s vehicle, casualty insurance will cover the cost of their repairs and/or medical bills.

When it comes to property and casualty insurance, there are several different types available to protect you and your personal assets. These include but are not limited to:

Property and casualty insurance can cover a variety of different scenarios, depending on the type and coverage you choose.

Homeowner's P&C insurance may cover:

Renter's P&C insurance may cover:

Auto P&C insurance may cover:

Watercraft P&C insurance may cover:

The exact amount of property and casualty insurance coverage you need depends, of course, on your particular situation and type of policy. Generally, it is recommended that homeowners and renters have at least $300,000 worth of liability coverage in case of a lawsuit. It's also important to consider additional factors, such as the value of your assets, the cost of living in your area, and any other special items you want to be included in the coverage.

For the most accurate quote, it's best to contact an experienced personal insurance advisor near you. They can help you understand the coverage options available and assist you in finding the policy that best fits your unique needs.