How Does Property and Casualty Insurance Work?

What is property and casualty insurance?

Property and casualty insurance covers a person in the event that damage or death occurs and they are liable. The two primary types of property and casualty insurance are homeowners and automobile. A homeowners policy covers damage related to weather, fire or other unforeseen damage or if someone is injured or killed in the home. Auto insurance protects a car owner in the case that they get into an accident or kill someone with their car.

Property and casualty insurance can be purchased for boats, motorcycles, recreational vehicles, apartment rentals, among others. In some areas, flood and earthquake insurance policies are sold, as "Acts of God" are often excluded from indemnification.

Getting insured: Automobiles

U.S. states require owners of automobiles to carry a basic insurance policy on their automobiles. Banks who fund auto loans and leases may require that a collision policy be purchased to protect the vehicle during the term of the loan.

Many states have systems which match vehicles registered within the state to valid insurance policies. Enforcement varies on a state-by-state basis. In New York, drivers are notified immediately of a lapse in insurance and are threatened with criminal action. Other states tie the expiration of license plates to the expiration of insurance.

Getting insured: Houses

Banks which issue mortgages typically require proof of insurance to protect the property they own. Typical insurance policies provide coverage in case of fire or storm-related damage to the home. Homes in earthquake-or flood-prone areas are generally required to carry policies that protect in case of damage from "Acts of God." The policies protect the homeowner for the value of the home and its contents.

Insurance riders

Insurance buyers can purchase riders, or extra insurance for special items. Jewelry, computers, expensive aftermarket additions to automobiles can be protected with riders that are separate from the central policy. In the case of damage or loss, the items are fully protected without haing to pay a deductible. In many cases, especially with jewelry, policies can be tailored to appreciate with time to accommodate for increases in the value of precious metals.

Getting reimbursed for damage

Filing a claim with your insurance company works basically the same for both auto and home. The person who's insurance is being charged makes a report to their company. Insurance companies usually take over at this point, contacting the other driver (in an auto insurance claim) or sending an investigator to the house (for a homeowner's claim).

Claim checks are typically paid out after a deductible, or minimum for placing a claim, is met.