Property and Casualty Insurance
Property and Casualty insurance protects against property and casualty losses, such as flood, earthquake, professional liability, umbrella liability, automobile, homeowners and renters. Other forms of property casualty coverage include premises liability, product liability, medical malpractice, general liability and errors and omissions.
Definition of Property Casualty Insurance
P&C insurance indemnifies the insured – by definition, that means to ‘make whole’, or to restore the status quo. That means that if you were incur any losses, you would be restored to the status you were before the loss.
Professional Liability Insurance
Professional liability insurance is especially important if you are in a high liability profession. Medical or legal malpractice insurance can be very helpful if you are in these professions. Similarly, for business owners, you should have premises liability insurance for your place of business, and product liability insurance for your business products, be it any part or component.
In these instances, an umbrella policy would also be very helpful, as you would receive significant additional insurance – excess liability insurance on top of the liability protection that on top of your homeowner or automobile insurance.
Limitations of Property and Casualty Insurance
As Jarvis and Mandell suggest, there are some limitations of P&C insurance that you should be careful about.
These exclusions come from what you assume to be but is not actually the case. They are usually hidden cleverly away in the fine print. Most importantly, do note that umbrella policies only apply if certain underlying insurance coverage amounts are in effect. That is, if your liability limits are too low, you would not be protected by the umbrella coverage.
Inadequate policy limits
Your policy might not protect you against large judgments; the jury routinely hands out awards in excess of the coverage limits of traditional auto, medical malpractice, employee harassment and other common P&C insurance policies.
Insurance forces you to admit liability and settle
If your professional reputation is at stake, you might want to settle the case privately. That is because once you file a claim with the insurance company, the insurance company will dictate when the case is settled and how much the case settlement will be.
Each claim adds to your premiums
This is by far the greatest limitation of P&C insurance policies. Unfortunately, each claim that you make will add to your premiums, as you would be considered a greater risk to the insurance company. That means that over time, if you have to claim for quite a number of lawsuits, there could be an increasingly expensive insurance premium.
How do you protect yourself in view of these limitations of the Property and Casualty policies? Make sure you know exactly how much and what your P&C policy insures you against. Also, recognize that there are asset protection tools that can complement Property and Casualty Insurance policies well; P&C policies should not be your only asset protection strategy.