Casualty insurance has seen a decline in coverage and pricing in the 2023, with both of them presenting potential challenges to the insurance market.
Environmental, social and governance (ESG) concerns appear to be on the rise and could impact insurer underwriting decisions. The report also talks about an increased focus on clarifying or excluding chemicals, energy, communicable disease (COVID-19), abuse and molestation, and wildfires.
Casualty insurance refers to the insurance component that primarily protects a person or business when held liable for their negligence.
In other words, it covers the insured entity’s liabilities to others. It generally includes liability, vehicle, theft, and worker’s compensation insurance.
Insurers review insurance coverage
While still early, the impact of COVID-19 and the war in Ukraine will likely have insurers review coverage definitions continuing a trend to narrowing or limiting coverage.
While pricing for worker’s compensation continues to be profitable, consistent and stable, auto liability remains unprofitable, and has seen a continued rate pressure.
Pricing in the marketplace is competitive, showing slow increases driven mainly by loss severity. Umbrella and excess and market remains challenging with rate and growth in client being major price factors.
While coverage and pricing have seen a decrease, continues the report, retentions have remained stable with no changes, and although capacity has increased, it still faces potential challenges.
Insurance capacity is still constrained for difficult risks
It offers protection from the risk of liabilities. For example, it protects if the insured are held accountable for the injuries or property damage to a third party. In addition, it compensates third parties who file lawsuits or make formal claims against the insured for problems their insurance covers.
Capacity is still constrained for difficult risks; being readily available for less complex risks.
Many insurers have indicated a focus on growth in 2023 with potential to open capacity for difficult risks, which will come with significant rate impacts which reflect the risk.
Finally, new insurer capacity continues to emerge, but not with lower rates, and very limited appetites. Auto liability capacity will continue to be limited, possibly seeing more insurers exit the marketplace. Reinsurance market remains capitalised.
What Is Casualty Insurance?
Casualty insurance is a broad category of insurance coverage for individuals, employers, and businesses against loss of property, damage, or other liabilities. Casualty insurance includes vehicle insurance, liability insurance, and theft insurance.
Liability losses are losses that occur as a result of the insured’s interactions with others or their property. For homeowners or car owners, it’s important to have casualty insurance as damage can end up being a large expense.
In addition to auto and liability insurance, casualty insurance is an umbrella term traditionally used to describe many other types of insurance, including aviation, workers’ compensation, and surety bonds.
Probably the best example of how casualty insurance works is an auto accident. Consider this hypothetical example:
Let’s say Maggie backs out of her driveway and hits Lisa’s parked car, resulting in $600 of damage. Because Maggie was at fault, she is legally liable for those damages, and she must pay to have Lisa’s car repaired.
Liability insurance would protect Maggie from having to cover the damages out-of-pocket.
Types of Casualty Insurance
The important casualty insurance types are explained below:
- Commercial General Liability: It is a form of insurance policy that provides cover to a business for the actual injury, personal injury, and property damage brought on by the functioning or operations of the business, its goods, or accidents that happen on the business premises.
- Professional Liability Insurance: Professionals like accountants and attorneys are insured against client-initiated allegations of negligence and other wrongdoing using this policy.
- Workmen’s Compensation Insurance: The policy helps employers compensate employees who get injured while working. It covers injuries, disabilities, and death of employees caused by accidents occurring at the workplace.
- Pollution Legal Liability Insurance: It offers pollution liability coverage for environmental hazards connected to the ownership or leasing of real estate and the use of a specific space, building, or site.
- Vehicle Insurance: The vehicle insurance policy offers financial protection against property damage or personal harm brought on by vehicle accidents and against liability that can come from related events.
- Home Insurance or Property Insurance: It protects the policyholders during damage to property that may arise due to theft, burglary, fire, or various other kinds of incidents.
How Casualty Insurance Works?
Just as you can purchase property insurance to protect yourself from financial loss, liability insurance protects you from financial loss if you become legally liable for injury to another or damage to property.
To be legally liable, one must have demonstrated negligence—the failure to use proper care in personal actions. If negligence results in harm to another, the offending party is liable for resulting damages.
Most business owners need to have casualty insurance coverage
People in the insurance industry often call liability losses third-party losses. The insured is the first party. The insurance company is the second party. The person to whom the insured is liable for damages is the third party.
Most business owners need to have casualty insurance coverage because, if you produce something, the possibility exists that it may end up harming someone.
Even if you are a sole proprietor, it’s a good idea to carry insurance that is specific to your line of work. For example, if you’re a freelance auto mechanic who works from your shop, you likely won’t need workers’ compensation coverage, but you should have insurance that covers a situation in which a repair you made causes injury to a customer.
Casualty insurance FAQs
What would a casualty insurance policy cover?
Casualty insurance contains liability coverage to aid in protecting the insured in the event they are held legally accountable for an accident that results in someone else’s injuries or property damage.
Is casualty insurance the same as life insurance?
No, it is different from life insurance. Casualty insurance explains that it is not directly concerned with life, health, or property insurance. Instead, casualty insurance is mainly liability coverage of an individual or organization for negligent acts or omissions.
How to file a casualty insurance claim?
Each insurer handles the claim process differently. The other party generally files the claim with the insured’s insurance company if the insured is at fault for the damage or injury. Home and auto liability claims aren’t usually deductible, so the insured’s insurance covers all costs for approved claims up to the limits. If the insured is the one who was hurt or had property damage, the insured will most likely work with the other person’s claim representative or insurance adjuster. Their insurer may pay the insured’s claim directly to the insured or another entity, such as a collision repair shop.
What are the steps of making an insurance claim?
- Step One: Contact Your Agent Immediately.
- Step Two: Carefully Document Your Losses.
- Step Three: Protect Your Property from Further Damage or Theft.
- Step Four: Working with Adjustor.
- Step Five: Settling Your Claim & Repairing Your Home.
Is casualty the same as liability?
General liability covers injuries and damages that occur in the course of doing business. Casualty insurance focuses on injuries on your business premises and crimes against it. Property insurance covers losses to your land, buildings, and belongings, and it is sometimes combined with casualty insurance.
What are examples of casualty?
A casualty loss can result from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or volcanic eruption.
What is an example of casualty policy?
Casualty insurance comprises various policy types, including auto insurance, homeowners/condo/renters insurance, burglary and theft insurance, workers’ compensation, commercial general liability insurance, public liability, pollution liability, and contaminated product insurance.
What is included in casualty insurance?
Casualty insurance includes vehicle insurance, liability insurance, and theft insurance. Liability losses are losses that occur as a result of the insured’s interactions with others or their property. For homeowners or car owners, it’s important to have casualty insurance as damage can end up being a large expense.
Edited by Oleg Parashchak – Editor-in-Chief Beinsure Media, CEO Finance Media Holding.