Definition of Personal Lines Insurance
Some insurance companies attempt to appeal to as many customers as possible by offering a range of lines. Others specialize in particular markets. These companies may specialize in commercial lines, that is, covering businesses, or they might specialize in personal lines.
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Definition
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Personal lines simply means insurance that is designed for personal use. Insurance companies sell these policies to individuals, as opposed to companies, to reimburse them for losses or damage to their possessions or to protect them from liability.
Types
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Auto insurance and homeowners insurance are two common types of personal lines insurance. Auto insurance usually covers you for damage to your vehicle and liabilities you might incur through accidents. It may also cover certain medical expenses. Homeowners insurance offers coverage for a number of unexpected events or perils that can damage a house, including fire and theft as well as liabilities you might incur for individuals injured on your property. Other examples of personal lines are renters insurance and umbrella policies that provide an extra layer of liability coverage. Health care coverage sold in the individual market is also sometimes considered a personal line.
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Process
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Personal lines insurance operates based on risk, eligibility and premiums. Insurance companies charge monthly premiums based on the risk that covered events will occur -- the lower the risk, the lower the premiums policyholders have to pay. There are some events insurers simply will not cover: few insurance companies, for instance, will cover hurricane damage in states like Florida. Often, policyholders will have to pay a deductible, a portion of the expenses, themselves before the insurance begins covering damages.
Advantages
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Not only does personal lines insurance help protect individuals from accidents and loss of property, it may be required to obtain property in the first place. Most mortgage lenders require that you have homeowner's insurance and all 50 states require some form of auto insurance for drivers. As with all insurance the idea is to pay smaller periodic payments against the risk of incurring a greater cost, often all at once, should an insurable event occur.
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