Property and Casualty Insurance

Property and casualty insurance policies protect things. Property insurance protects people against losses of and damage to things they have acquired, including houses and valuable items such as appliances or jewelry. Casualty insurance protects people against having their property taken to compensate others in settlements of legal disputes. Property and casualty insurance commonly go together because many policies include provisions to cover both casualty and property damage or loss. Common types of property and casualty insurance include (1) homeowner’s, (2) tenant’s, (3) automobile, (4) marine, and (5) commercial.

Casualty insurance resembles a more restrictive but similar form of coverage known as liability insurance. In general, liability refers to the legal and financial responsibility someone has to another person. A person can be found to be liable for causing loss or harm to another person or for having an unpaid debt. Some types of liability are covered under property and casualty policies. Liability claims require determination of fault for loss or damage, whereas other types of casualty claims may not.

When someone sustains injuries in, on, or caused by another person’s property, the property owner may be found legally liable for those injuries. For example, if someone is injured as a passenger in another person’s car, the car’s owner and driver are held legally responsible. If a person sustains injuries by slipping on a patch of wet ground at a private golf club, the club may be liable for damages. If someone is injured directly by someone else’s property, such as when the occupants of a car are hurt by the impact of someone else’s speeding car in an accident, the owner of that property may often be found legally liable.

1. Homeowner’s Insurance

Homeowner’s insurance covers a wide range of losses or damages to people’s houses and home property, as well as many types of liabilities for which homeowners might be responsible. It protects homeowners against losses from such causes as theft, storms, and fires.

Also, homeowner’s insurance typically pays for additional expenses related to home damage, such as fees for temporary lodging while damage is fixed. It also protects against most lawsuits that could arise from ownership of the property. It usually includes a type of coverage called medical payments. Such coverage would pay, for instance, for damages to a guest who slipped on the steps to the door of a house and suffered an injury. Homeowners insurance normally does not cover the risks associated with operating a home-based business, such as if a customer is injured on the premises.


2. Tenant’s Insurance

Tenant’s insurance, also known as renter’s insurance, provides much the same coverage as does homeowner’s insurance, but it does not cover damage to houses or apartments themselves. A fairly inexpensive form of insurance, it protects against loss of or damage to personal property and most lawsuits that could arise from occupying rented property. For example, tenant’s insurance would pay for damages caused by a fire that started in a policyholder’s apartment and spread to the rest of the building.


3. Automobile Insurance

Automobile insurance protects against damage to a policyholder’s car and most liabilities that could arise from operating that car. Most U.S. states allow drivers to satisfy their financial responsibility for the costs of auto accidents by obtaining insurance in three categories of liability coverage: (1) for injury to any one person, (2) for injury to two or more people, and (3) for damage to another person’s property. An increasing number of states are requiring drivers to obtain auto insurance by law.

Most U.S. states require that drivers who purchase auto insurance buy no less than a specified minimum of coverage, such as $25,000 toward the injury of another individual, $50,000 toward the injury of multiple persons, and $10,000 toward the damage of another person’s property. This minimum requirement is generally listed on policies as 25/50/10. Most Canadian provinces require $200,000 of liability coverage for covering the combined costs of bodily injury and property damage claims. In some provinces, such as British Columbia and Saskatchewan, the government operates compulsory programs of auto insurance in which all drivers must participate.

Most drivers also purchase medical payments coverage, which pays for treatment of injuries they or their passengers may sustain in an accident, and collision protection, which pays for damages to their own cars. Another optional form of auto insurance, called comprehensive, covers a person’s car against theft or many types of nonaccident damage, such as windshield cracks caused by rocks.

In addition, drivers may purchase insurance against injuries to themselves or their passengers from accidents with drivers who have little or no insurance. With underinsured motorist and uninsured motorist coverage, a person’s own insurance policy provides damage and injury compensation that would normally come from another person’s auto liability insurance. Another type of coverage, called personal injury protection or no-fault, is required in some states in addition to or instead of liability insurance. This coverage compensates drivers from their own policies for damages from accidents without determining responsibility for the accident.


4. Marine and Other Forms of Transportation Insurance

Boats and their cargo and passengers face many risks on unpredictable and powerful waterways. Marine insurance, one of the oldest forms of insurance, covers damage to and losses of boats, ships, marine workers, cargo, and passengers. Both businesses and individuals may purchase various forms of marine insurance.

Insurance for commercial ships or boats at sea, docked in a port, or on some inland waterways—as well as their cargo or passengers—is known as ocean marine insurance. There are four main types of ocean marine insurance: (1) hull insurance, (2) cargo insurance, (3) freight insurance, and (4) marine liability.

Hull insurance covers damage to a ship itself. Cargo insurance covers losses to a ship’s physical cargo. Freight insurance covers shippers against a loss of freight (payment for the transportation of cargo). Marine liability covers damages to people and property from collisions and other incidents.

Businesses involved in transporting cargo or passengers by land or by air can purchase coverage similar to that of marine insurance. Insurance policies for commercial transport of cargo by land or air are commonly known as inland marine insurance. However, because of the increasing importance of the passenger airline industry, specialized property and casualty coverage, known as aviation insurance or aircraft insurance, has developed to cover aircraft and their cargo or passengers.


5. Commercial Property and Casualty Insurance

Commercial property and casualty insurance cover businesses against a wide variety of liabilities and property damages or losses. Commercial property policies cover the building occupied by a business; such items as the furniture, fixtures, machinery, and inventory (unsold, warehoused goods) of a business; income lost by a business due to fire, theft, or other damage; and most liabilities that may arise from owning property and operating a business. A special kind of casualty insurance, called workers’ compensation, pays for employee injuries or illnesses that occur on the job.