You purchase insurance to protect your most important investments, like your car, house and personal items. Insurance also protects you from certain liabilities you face as a driver, homeowner, and renter. The type of insurance that protects you and your assets is called property and casualty insurance. In this article, we’ll explain what P&C insurance is and how this kind of coverage works.
What is property and casualty insurance?
Property and casualty (P&C) insurance isn’t a type of insurance. It’s an umbrella term that describes many types of insurance policies, including auto, homeowners, renters and condo insurance. Other common insurance policies, like health insurance and life insurance, are not forms of property and casualty insurance.
As the name suggests, P&C insurance contains two parts—property coverage and casualty coverage:
- Property coverage includes things like your house, car, clothing, furniture, electronics and valuables. If your personal property is damaged or destroyed by a covered peril, your personal property coverage will pay to repair or replace them.
- Casualty insurance covers your liability. For instance, if a delivery driver slips and falls on your icy driveway, the liability portion of your home insurance will pay for your legal fees if the driver takes you to court. If you cause a car accident, your car insurance liability coverage helps you pay for the other driver’s expenses.
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.
Types of P&C insurance
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 covers the personal items inside your home, like clothing and furniture, from common perils. For example, if your entire wardrobe was destroyed in a fire, your personal property insurance would help you buy new clothes. Home insurance also covers liabilities. If a guest got injured on your property and you were found responsible, your legal fees would be covered.
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 decided to sue you, the casualty portion of your renters insurance will pay for the cost.
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.
Power sports insurance
If you have a boat, ATV, golf cart or snowmobile, this type of policy is essential. Power sports insurance policies cover the vehicle from damages and liability 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.
How does P&C insurance work?
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.
Frequently asked questions
What is the difference between property and casualty insurance?
Property insurance covers your assets and belongings. Casualty insurance covers your liabilities as a homeowner, renter or driver.
What are the types of P&C insurance?
There are a variety of types of P&C insurance. Some of the most common ones are car insurance, home insurance, renters insurance, condo insurance, landlord insurance and power sports insurance.
Who needs P&C insurance?
If you have any type of insurance policy, you probably already have P&C insurance. For instance, every driver, homeowner and rental tenant has a type of insurance that falls under the P&C umbrella.