Property and casualty insurance, often called P&C insurance, describes policies that protect people from losses related to their property and claims that they’re responsible for losses others have experienced.
Many types of P&C insurance policies have coverage for both your property and your liability. Take your homeowners insurance as an example. It covers your residence and liability claims filed against you. Because property insurance and casualty insurance are often packaged together, the insurance industry typically treats them as a unit.
What is property insurance?
Property insurance – the “P” in “P&C coverage” – protects an insured's physical property. In layman’s terms, that means it covers your “stuff” by paying to repair or replace it if it’s damaged by certain perils.
What counts as covered property depends on the type of insurance you’re talking about. For example, home insurance safeguards the dwelling you live in, other structures on your property, and your personal property. Similarly, an auto insurance policy covers damage to your car.
What does property insurance typically cover?
We said property insurance covers “certain perils” because there are several types of property coverage and every one works a little differently. Providing a comprehensive list of which perils are covered would be nearly impossible!
That said, there are two general types of coverage for property policies: named peril coverage and open peril coverage. Named peril coverage is only triggered when the covered property is damaged by an event listed in the policy.
Open peril coverage is the opposite. It covers damage caused by any event except the ones listed as excluded in the policy, so it provides broader coverage. Accordingly, it’s also more expensive than a named peril policy.
What is casualty insurance?
Casualty insurance covers your responsibility if you harm someone else, either by causing them bodily injury or by damaging their possessions. That harm may result in a financial loss for the person you injured, so they might seek compensation from you. If that happens, your casualty insurance helps protect you.
For example, let’s assume your daughter kicks a soccer ball through your neighbor’s plate glass window, and you end up being legally responsible for the repairs. The casualty, or liability, portion of your homeowners insurance covers the claim, depending on all of the facts and circumstances leading to the damage and the terms of your policy. Generally, there is no deductible on liability claims for homeowners insurance, but commercial liability policies can sometimes include a deductible.
Key types of property & casualty insurance
In many cases, property and casualty insurance policies are grouped into a single offering. We’ve listed several examples below.
Homeowners insurance
Homeowners insurance policies typically have six coverage parts. Four of these are related to property losses, including:
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Dwelling coverage.
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Other structures coverage.
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Personal property coverage.
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Loss of use coverage.
Each helps you to recover from the financial losses that might occur if your property is damaged or destroyed.
The other two coverage parts protect you in liability claims:
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Personal liability coverage provides defense against accusations you caused someone else a financial loss.
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Medical payments coverage pays a guest’s medical bills if they’re injured on your property.
Condo insurance
The property portion of condo insurance works pretty much the same as a homeowners policy. It guards against losses you might experience when your property is damaged. The main difference is the policy is limited to the condo owner’s particular unit and its contents. The main structure – at least when the unit is in a multicondo building – and any common areas are usually the responsibility of the condo association.
Renters insurance
Renters insurance, sometimes called an HO-4 policy, is designed for those who lease their living space. Because they don’t own the dwelling where they reside, they don’t need coverage for the building itself.
But what they do need coverage for is their personal liability and belongings, like furniture, electronics, jewelry, and the like. Renters insurance helps pay to replace or repair these items if they’re damaged by a common peril like fire, theft, and vandalism.
Typically, renters insurance only protects the insured's property. If you have roommates, then each person should secure their own policy.
Landlord insurance
A landlord insurance policy covers the physical structure of a property that’s rented out to others, but doesn’t safeguard tenants' belongings. Landlord insurance may also include personal property coverage for items the owner stores at the rental building as well as liability insurance.
Auto insurance
Most states require car owners to get a minimum amount of liability insurance on their vehicle. That coverage helps pay the other driver’s costs, like medical bills and repairs, if you’re responsible for causing an accident.
You can also purchase physical damage coverage as part of your auto policy to help pay for damage to your vehicle. Collision coverage protects against damage caused by accidents with other vehicles or objects, while comprehensive coverage protects against most other perils, such as theft of your vehicle, fires, or damage caused by an act of God.
Business owners policy
A business owners policy, also called a BOP, combines two essential protections for small business owners:
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General liability insurance that protects against financial losses resulting from claims that the business caused bodily injuries or property damage to third parties.
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Commercial property insurance that covers items a business owns, like a physical building, business equipment, office furnishings, and inventory.
Why property and casualty insurance is important
Property and casualty insurance provides essential coverages for individuals and businesses. In fact, property and casualty insurance protects against some of the most common causes of financial loss that people face.
The benefits of combining property and casualty coverages
Some examples of property and casualty insurance, like home, auto, and condo, bring together coverages that people need. While not every P&C policy provides both property and liability insurance, the ones that do make it easier and more efficient to get necessary financial protections.
It helps with lender requirements
Mortgage lenders typically require property insurance (aka hazard insurance) to protect their financial stake in a property, but many also require casualty insurance. The reasoning is essentially the same: Your home is a valuable asset that your lender has an interest in. Rather than risk losing it in a lawsuit, mortgage lenders want to know it’s protected with liability coverage.
Peace of mind through P&C insurance
One of the most underappreciated aspects of property and casualty insurance is the peace of mind it provides. Coverage protects from a large number of unexpected events and accidents, including natural disasters, fires, and accidental injury lawsuits.
Factors influencing property and casualty insurance premiums
Generally speaking, property and casualty premiums depend largely on the type of coverage you’re getting, but other factors play a role as well, including:
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The amount of coverage you require.
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What assets need protection.
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Your claims history.
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The size of your deductible.
Tips for lowering property and casualty insurance premiums
Depending on the type of P&C policy you want, you may be able to get a lower premium by:
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Adding safety features. Many insurance companies offer lower rates when you’ve taken steps to secure your property. Similarly, reducing the likelihood of liability claims through better safety can mean lower premiums.
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Increasing deductibles. Higher deductibles usually means a lower premium. If this is an option for you, be sure to think about what you would be able to afford in a loss.
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Bundling policies. Insurers have discovered that combining policies, like home and auto insurance, into a single package is a good way to retain customers while also getting them the important coverage they need.
How to choose the right property and casualty insurance provider
While price is a major factor when choosing an insurance provider, it shouldn’t be the only thing you consider. You also want confidence that your insurance company will treat claims fairly, promptly, and with a high level of customer service.
Other information to consider when selecting your P&C provider includes its:
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Coverage options.
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Reputation.
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Service and support levels.
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Discounts.
Importance of multiple comparison quotes
Unless you compare, you won't know if you’re getting the P&C coverage that best fits your situation. We usually suggest getting at least three quotes from different insurance companies for coverage that is as similar as possible (i.e., same deductibles and coverage amounts). This can give you a better idea of whether you’re getting a good value for your money.
A quick summary
Property and casualty insurance describes a group of several types of insurance policies, including homeowners insurance, auto insurance, business insurance, and renters insurance. Many of these policy types combine coverage for both your liability and your property to make it easier to get the protection you need.
