Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
If you’re shopping for an insurance policy, you might come across the term “property and casualty insurance.”
Property and casualty insurance are standard parts of insurance policies, but what they cover is different:
- Property insurance covers your own physical assets like a vehicle or house.
- Casualty insurance provides liability coverage if you’re responsible for other people’s property damage or injuries.
What Is Casualty Insurance?
Casualty insurance provides liability coverage within certain policies, like car insurance and home insurance.
If you’re responsible for someone else’s property damage or bodily injuries, the casualty insurance portion of your policy compensates the person making the claim against you. It also covers your legal fees, court costs and settlements if you get sued.
What Does Casualty Insurance Cover?
What casualty insurance covers can vary depending on the type of insurance.
Home Insurance
- Expenses related to injuries to others for which you (or your household members) are legally responsible (not including car accidents).
- Costs associated with accidentally damaging someone else’s property (not including car accidents).
- Legal costs if you get sued because of an accident, including legal judgments against you and settlements.
Car Insurance
- Another person’s medical expenses (and potentially pain and suffering) if they are injured in an accident you cause.
- Another person’s vehicle repairs if you cause an accident.
- Fixing someone else’s property (like a wall or fence) if you cause an accident.
- Legal costs if you get sued because of an accident.
- Accidents caused by uninsured or underinsured motorists, where you make a claim for your own injuries on your own uninsured motorist coverage.
Renters Insurance
- Expenses for others’ injuries when you (or your household members) are legally responsible (not including car accidents).
- Costs if you accidentally damage someone else’s property (not including car accidents).
- Legal costs if you get sued because of an accident.
What Does Casualty Insurance Not Cover?
If casualty insurance doesn’t apply to your situation, in many cases another type of insurance may cover the problem.
Car Insurance
| Problem | Type of insurance that may cover the problem |
|---|---|
| Your injuries if you cause an accident | The personal injury protection (PIP) or the medical payments coverage portion of your car insurance policy; health insurance |
| Physical damage to your vehicle | Your car insurance policy’s comprehensive or collision coverage |
| Vehicle theft | Your car insurance comprehensive coverage |
| Personal items inside your vehicle that are damaged or stolen | Your home or renters insurance |
| Injury or property damage claims that exceed your liability limits | Umbrella insurance |
Home Insurance
| Problem | Type of insurance that may cover the problem |
|---|---|
| Your injuries or a family member’s injuries | Health insurance |
| Pet medical expenses | Pet insurance |
| Dog bites | Homeowners or renters casualty insurance generally covers bills if your dog bites someone else, but some insurers exclude dog liability |
| Intentional physical harm or property damage | Intentional acts not covered by insurance |
| Home-based business claims | Business insurance |
| Damage to your home or personal belongings | Home insurance policy’s property coverage |
| Break-ins and theft | Home insurance policy’s property coverage |
| Injury or property damage claims that exceed your liability limits | Umbrella insurance |
| Temporary living expenses if you have to relocate while your home is repaired following a problem covered by a policy, like a fire | The additional living expenses coverage within a home or renters insurance policy |
Renters Insurance
| Problem | Type of insurance that may cover the problem |
|---|---|
| Your injuries or a family member’s injuries | Health insurance |
| Pet medical expenses | Pet insurance |
| Dog bites | Homeowners or renters casualty insurance generally covers bills if your dog bites someone else, but some insurers exclude dog liability |
| Intentional physical harm or property damage | Intentional acts not covered by insurance |
| Home-based business claims | Business insurance |
| Damage to your personal belongings | Renters insurance property coverage |
| Break-ins and theft | Renter insurance property coverage |
| Injury or property damage claims that exceed your liability limits | Umbrella insurance |
| Temporary living expenses if you have to relocate while your home is repaired following a problem covered by a policy like a fire | The additional living expenses coverage within a home or renters insurance policy |
| A roommate’s personal items or liabilities in the event of a claim | Your roommate’s insurance |
How Casualty Insurance Works
Casualty insurance can cover you if another person accuses you of being responsible for their injuries or property damage.
For example:
- If someone is injured at your home and needs medical treatment, that person could receive a settlement from your insurance company.
- If you are sued because of the accident, your insurance company would cover your legal fees.
No matter the type of insurance, casualty insurance always has a coverage limit—the maximum amount the insurer will pay for a single claim. If you have a claim against you that exceeds your policy limit, you will have to pick up the cost.
For example, say you cause a car accident and the other driver suffers serious injuries. Their medical bills total $90,000, but you only have $50,000 in bodily injury liability insurance. In that case, the other driver could sue you for the difference, which you would have to pay out of pocket.
You may purchase an umbrella insurance policy. Umbrella insurance is an excess liability insurance policy and kicks in when the limits of your “base” policy limits are exhausted.
What Is Property and Casualty Insurance?
Property and casualty insurance, often shortened to P&C insurance, describes insurance policies that cover your property and liabilities. Some of the most common types of P&C insurance include parts of auto, homeowners, renters and condo insurance.
Property and casualty insurance is typically packaged together within one policy. For example, homeowners insurance includes both property insurance and casualty insurance.
Property and casualty insurance is typically packaged together within one policy.
Example of How Casualty Insurance Works as Part of Home Insurance
- Jill falls down the front steps at Debbie’s home and breaks her ankle.
- Debbie had put off repairing the railing of her steps, which caused the fall
- Because Debbie neglected to repair the railing, she bears some legal responsibility for the accident.
- In this instance, the casualty insurance portion of Debbie’s homeowners insurance covers Jill’s hospital bills. It also pays Debbie’s legal fees (up to the coverage limit) if Jill sues Debbie.
Example of How Casualty Insurance Works as Part of Car Insurance
- As Kevin is backing out of a driveway when his SUV hits a pickup truck belonging to his neighbor, Jason.
- The crash is Kevin’s fault, and he’s legally liable for the $1,000 in damage caused to Jason’s truck.
- The casualty insurance component of Kevin’s auto insurance pays for the damage to Jason’s vehicle.
Example of How Casualty Insurance Works as Part of Renters Insurance
- Molly is installing a window air conditioning unit in her second-story apartment when the air conditioner falls out of the window and onto a car parked in the driveway below.
- Molly is responsible for causing $3,000 in damage to the car.
- The property damage liability insurance within her renters insurance policy pays the vehicle owner for repairs.
Is Casualty the Same as Liability?
Casualty insurance is essentially the same as liability insurance. If you find yourself responsible for an injury or property damage to someone else, the liability portion of your insurance policy covers it.
For example, car insurance and home insurance are considered property and casualty insurance policies because they cover your property (a vehicle or house) as well as your liability. For comparison, flood insurance is only a property insurance policy. It covers your house and personal items if there’s flood damage, but it doesn’t include any liability coverage.
Why You Need Liability Insurance
Having liability insurance can help you avoid having to gut your savings and sell off assets, and even avoid bankruptcy, if you have a large claim against you.
For example, if your liability coverage limit is less than a court judgment against you, you’re responsible for paying the remainder not covered by your insurance.
How Much Casualty Insurance Do You Need?
You generally want to buy enough liability insurance to cover what you could lose in a lawsuit.
Most states require drivers to carry a minimum amount of liability car insurance. You can buy more than the minimum required, which is generally recommended. State minimums are typically not enough to properly cover your assets.
Auto insurance has three levels of liability coverage listed in policies:
- Injury or death to one person.
- Injury or death to more than one person per accident.
- Damage to someone else’s property.
The liability coverage within a homeowners policy is often between $100,000 and $500,000. If your assets exceed $500,000, insurance companies offer umbrella insurance, with coverage of $1 million and up. Umbrella insurance also covers some extra problems, such as libel and slander claims against you.
Your liability coverage limits should be enough to match or exceed your net worth. This includes the total value of your personal assets, like real estate, vehicles, savings, retirement accounts and investments.
Best Car Insurance Companies 2024
With so many choices for car insurance companies, it can be hard to know where to start to find the right car insurance. We've evaluated insurers to find the best car insurance companies, so you don't have to.
Learn More
As a seasoned expert in insurance, particularly property and casualty insurance, I bring a wealth of knowledge and hands-on experience to shed light on the concepts presented in the article. I have an in-depth understanding of insurance policies, coverage types, and how they function in various scenarios. Let's delve into the key concepts covered in the article:
1. Property and Casualty Insurance Overview:
- Property and casualty insurance, often abbreviated as P&C insurance, encompasses policies that cover both property (physical assets) and liabilities (responsibility for damages or injuries).
- Common types of P&C insurance include auto insurance, homeowners insurance, renters insurance, and condo insurance.
2. Casualty Insurance Explained:
- Casualty insurance provides liability coverage within certain policies, such as car insurance and home insurance.
- It compensates for property damage or bodily injuries for which you are responsible, covering legal fees, court costs, and settlements if you're sued.
3. What Casualty Insurance Covers:
-
Home Insurance:
- Injuries to others for which you're legally responsible.
- Costs associated with accidentally damaging someone else's property.
- Legal costs if you get sued due to an accident.
-
Car Insurance:
- Another person's medical expenses and vehicle repairs if you cause an accident.
- Legal costs if you face a lawsuit.
- Accidents caused by uninsured or underinsured motorists.
-
Renters Insurance:
- Expenses for others' injuries when you're legally responsible.
- Costs for accidentally damaging someone else's property.
- Legal costs if you get sued due to an accident.
4. What Casualty Insurance Does Not Cover:
- The article outlines scenarios where casualty insurance might not apply, suggesting alternative types of insurance to address specific issues.
5. How Casualty Insurance Works:
- Provides coverage if you're accused of being responsible for someone else's injuries or property damage.
- Always has a coverage limit, and if a claim exceeds this limit, additional costs may need to be covered personally or through umbrella insurance.
6. Casualty vs. Liability:
- Casualty insurance is essentially the same as liability insurance, covering responsibilities for injuries or property damage to others.
7. Importance of Liability Insurance:
- Highlights the significance of liability insurance in preventing financial hardships, such as selling assets or facing bankruptcy, in the event of a substantial claim.
8. Determining Adequate Casualty Insurance:
- Advises on purchasing enough liability insurance to cover potential losses in a lawsuit.
- Recommends evaluating personal assets and net worth to determine suitable coverage limits.
9. Best Car Insurance Companies 2024:
- The article briefly touches on the importance of selecting the right car insurance company, with an emphasis on evaluating insurers based on certain criteria.
In summary, the concepts covered in the article provide a comprehensive understanding of property and casualty insurance, its coverage scope, and the importance of liability protection in various insurance policies. The information presented is crucial for individuals navigating the complexities of insurance to make informed decisions tailored to their specific needs.
