What Is Property and Casualty Insurance?

Property and casualty insurance coverage can help protect you and your valuables.

Written by Ashlyn Brooks / August 11, 2022

Quick Bites

  • Property insurance covers your possessions in the event that they are damaged.
  • Casualty insurance is a form of liability insurance that protects you should you be found legally liable for harm or damage.
  • Talk to your policy provider to make sure the items most important to you are covered in your insurance plan.

Insurance bills are yet another monthly bill to pay. However, if you are ever to need it, you will be very thankful for the out-of-pocket expense it saves you. You can get insurance coverage for just about anything: your life, health, home, car and the list goes on. One area of coverage that might slip under the rug is property and casualty insurance.

Also referred to as P&C insurance, it helps protect your personal belongings and cover your back if you are ever found at fault for hurting someone or damaging their property. P&C insurance is often sold together and you might already have coverage in your current plans.

We’ll look into both property and casualty insurance a little deeper to give you a clearer picture of if this insurance type is something you need or want to increase in your current policy.

Inside this article

  1. What is property insurance?
  2. What is casualty insurance?
  3. Example of property insurance
  4. Example of casualty insurance
  5. Types of insurance
  6. What do I need?
  7. FAQ

What is property insurance?

“Property insurance coverage is simple," says Kim Markus, insurance officer at Kin Insurance.

"You buy a policy to cover something you own and pay a premium. In exchange for that premium, the insurance company promises to help you recover if something happens to the property you insured by paying for the damage.”

Property insurance will typically cover natural and weather-related damage. Including but not limited to damage caused by:

  • Fire

  • Smoke

  • Wind

  • Hail

  • Lighting

  • Hurricanes

What is casualty insurance?

“Casualty insurance is more on the liability side of things," says Ben Guttman, broker at North Central Insurance Agency. "This type of insurance typically covers your responsibility if you harm someone else, either by causing them physical harm or by damaging their possessions.”

Where casualty insurance helps cover you is when the harm you caused someone results in a financial loss for that person. They might seek out compensation from you and if that happens casualty insurance helps cover that cost.

Example of property insurance

Property insurance works by covering, let's say your home, in the event of extreme damage caused by natural events. Say your house was struck by lightning, caught on fire, and destroyed the bulk of your property. Having property insurance coverage will allow you to repair your home at minimal to no cost. There are typically three types of property insurance coverages that repair the damages at different levels of evaluation.

  • Total replacement cost: Covers the cost of repair/replacement of the property at its equal value.

  • Actual cash value: Coverage will pay for the replacement cost minus depreciation. Meaning that if the item destroyed was 20 years old, you will receive compensation based on its 20-year-old value. You won’t receive the full compensation to replace the item with a newer version.

  • Extended replacement cost: Will pay for the amount to cover the damages and up to 25% extra to account for the increased cost of construction and supplies.

Example of casualty insurance

The most relevant example of when you would benefit from casualty insurance would be for an auto accident.

For example, say you rear-ended the car in front of you at a red light. Since you weren’t paying attention and caused the accident, you are legally liable for the damages you caused. If the cost to repair the car you hit is $1,000, casualty insurance coverage will protect you from having to cover the repair cost out-of-pocket.

Types of property and casualty insurance

Property and casualty insurance is usually found in various types of insurance policies. The list can be quite extensive, but we’ll cover a few of the most common ones you’ll likely come across.[1]

Homeowners insurance

Homeowners insurance protects your house and possessions from different types of damage such as:

  • Fire

  • Severe storm damage

  • Theft

It will also cover you if you are found legally liable for damage to someone else’s home or property.

Renters insurance

Renters insurance is similar to homeowners insurance. It is cheaper than homeowners insurance because you are typically only covering your personal belongings that are with you in the apartment, home, or condo that you are renting.

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Renters insurance is often required when signing a lease for an apartment. This is because the insurance policy the property owner holds does not cover damage to each tenant's personal property.

Car insurance

Most states require that you hold some level of car insurance in the form of bodily injury and property damage coverage. Car insurance not only helps protect you in the event of an accident but also helps reduce your financial burden if you are found at fault for the auto accident.

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Business insurance

Business insurance covers your assets, like your building or office spaces and the business's property (i.e. inventory and equipment). Having business insurance will also cover different types of liabilities such as workers’ compensation and overall general liability protection.

Are these kinds of insurance policies something I need to consider?

Property and casualty insurance is highly advisable to consider. They both protect you against life’s unexpected events and can help you financially if you are ever found legally responsible for harm or damages. It generally is a small fee to pay per month compared to the out-of-pocket expense you would have should damage happen to your home or if you’re at fault for causing damage.

When asking yourself, “should I carry P&C insurance?” Definitely keep in mind that the pros of having P&C coverage far outweigh the cons.


What is the purpose of P&C insurance?

Property and casualty insurance is a term describing the two forms of broad coverage that financially protect you if the property you own is damaged, lost, or stolen (“Property”) or if you are responsible for causing injury to another person or damage to his or her property (“Casualty”)

Is P&C insurance the same as life insurance?

No, P&C insurance does not include other types of insurance plans such as life insurance and health insurance.

Article Sources
  1. “What is property and casualty insurance?” Progressive. https://www.progressive.com/answers/property-and-casualty-insurance/

About the Author

Ashlyn Brooks

Ashlyn Brooks

Ashlyn is a personal finance writer with experience in budgeting, saving, loans, mortgages, credit cards, accounting, and financial services to name a few.

Full bio

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