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832 West Neville Street

Beckley, West Virginia 25801

Insurance Explained: Breaking Down the Complicated

What is Property and Casualty Insurance? And Why Does It Matter?

On the surface level, property insurance protects your property against losses. Your property can be
anything: your vehicle, home computer, carpeting in your home. Depending on the level of coverage you
choose, you can insure all these items – and many, many more – to avoid paying out of pocket in the
event of a covered loss. Instead, your insurance company will pay to repair or replace those covered
items.

Your insurance premium (the amount you pay to keep your policy active) is how you uphold your end of
the contract you keep with your carrier, so as to guarantee that your insurance company will uphold
their end, too. In simpler terms, you pay a small amount of money to avoid having to potentially pay a
large – or even catastrophic – amount later. Your insurance company collects premiums from all
policyholders, so they are able to pay claims when they arise.

Choosing a coverage amount is a very important part of the process on your end. For example, if your
home is worth $200,000 and you only hold $150,000 worth of coverage, facing a total loss would leave
you with a $50,000 out-of-pocket expense to rebuild the home. Another aspect to consider is settlement
options. The most common types of settlement are replacement cost or actual cash value – some
insurers will even allow you to choose for yourself. Replacement cost is the exact amount it would cost
to purchase that item at the time of loss; actual cash value is that cost, minus the depreciation that item
has taken on over its lifetime. There is no wrong option, but it’s safe to say that replacement cost value
will come with higher premiums and higher payouts. It’s up to you which makes the most sense for your
property.

Casualty insurance is a bit different, but no less important; some may even consider it more pertinent to
have. This type of coverage does not result in you receiving payment for anything, but shields you from
having to pay for damages to others. Imagine you have friends over for dinner and accidentally drop a
boiling pot of water on your friend who was making small talk with you in the kitchen, resulting in burns.
Because you were the one to cause the injuries, the medical bills would ultimately be your responsibility
to pay. Without any liability insurance coverage, you would have to pay out of your own wallet for your
friend’s treatments. On the contrary, if you do have this coverage, your insurer will front the bill up to
your chosen limits.

You can see how these two types of insurance help prevent you from paying incredible sums. If you
need insurance, would like a quote to compare your current prices, or have any questions about
property and casualty insurance, we are happy to help. Give us a call at 304-253-4444.