About Property and Casualty Insurance

When you own property, whether it is real estate or personal property, you may be required to insure it against an accident, theft or another form of damage. Typically, property insurance covers the financial investment of the owner against theft or other events, while causality insurance protects the owner against damage to the property from accidents. Often these two types of insurance are bundled together in a combined policy.

Function

The casualty portion of your insurance policy will protect you not only from an accident that results in damage to your property, it may also provide liability protection if someone else or their property is injured as a result of your negligence. Most states require that drivers purchase a minimum amount of liability insurance on any vehicle they own. If you are in an automobile accident, where you are at fault, your automobile insurance will pay the other driver's costs.

Features

Property insurance protects your investment in a home, a car, a business or your personal belongings if you are a renter. A property insurance policy ensures that damage to your belongings from fire, weather or unforeseen accidents, such as a car driving through your front window, is covered. The dollar amount of insurance you purchase will determine the premium you pay.

Considerations

Many homeowners' insurance policies include both property and casualty insurance, each with separate requirements. When purchasing a homeowner's policy, the agency will insure your property for either its actual cash value or its replacement value. The replacement value is what it would cost to rebuilt the same house at today's construction prices, while actual cash value is the replacement cost minus depreciation. If your home is old or in disrepair, an agency may only insure it for the actual cost value.

Misconceptions

When you purchase property or casualty insurance, read the exclusion portion of the policy. Although agents are required to inform you of specific causes of damage that are not covered, often the consumer is overwhelmed with the information and does not understand the ramifications. Unwary homeowners may be surprised to find tornado, flood or earthquake damage was not a part of their policy. You may have to pay extra to include one or all of these coverages.

Potential

You may be able to save money on your property and casualty insurance if you agree to a high deductible per loss event. This is a common practice in automobile insurance policies, where premiums are often expensive. This is an effective money saver if you are a good driver but if your automobile is involved in an accident; you will have to pay the deductible out of pocket before your insurance agency will pay the balance.