Casualty insurance is traditionally one of the most difficult and nebulous types of insurance to define. One of the main reasons is that is has evolved to deal with elements of risk that are not strictly cash loss related. While similar to some functions of marine insurance that deal with un-provable loss, casualty insurance has evolved to cover elements of risk that are similar to liability insurance.

The similarity to marine insurance is more that just coincidental as casualty insurance has its origins in marine insurance. In general terms, one of the best ways of understanding of casualty insurance is using the liability insurance connection; that is not intended to cover third-party liability per se. One of the more directly understandable forms of causality insurance is workers compensation insurance.

in 1946, the National Association of Insurance Commissioners defined, casualty insurance as a blanket term for legal liability except marine, disability and medical care, and some damage to physical property. This would seem to conflict with the association of workers compensation insurance as a form of casualty coverage, which is due to the shifting definition of insurance as the nature of risk expands.

In 1946, it would have been nearly impossible to purchase insurance coverage for a nuclear accident, as the technology did not exist just yet. However, in recent years, now there are specialized policies that are purchased by families that live near nuclear power plants. The state of Illinois, for example, defines Glass insurance as a form of casualty insurance along with a number of other risk types, such as livestock and miscellaneous coverage, just as every state has their own terms for casualty insurance.

At times, casualty insurance was considered miscellaneous insurance. It was used to cover elements of risk that did not fall easily under other classifications. On example is Livestock insurance. Some states define livestock insurance as property coverage; others, like the state of Illinois, define it as a form of casualty insurance.

Casualty insurance is the insurance that covers losses that are not total but have a measurable impact on a person and his property. In terms of automobile insurance, damage is considered a casualty insurance as it covers the “casualty” to the vehicle and provides for making the vehicle whole again. Another interesting example of casualty insurance (in some states) is glass insurance.

Glass insurance harkens back to the 19th century when glass was a rather expensive and, of course, fragile substance. Glaziers (related to the German Umlaut, gla”ss”iers-glaziers) were a craft guild and the cost to replace a window, as a bank would say, would be very high. Compounded by the natural fragility of glass this created the glass insurance policy.

Although you might be tempted to think that this is an archaic form of insurance, you would be wrong. Automobile windshields are covered by glass insurance and, as anyone who has had to replace a piece of glass will tell you, it is still costly. All insurance is geared around the idea of potential loss and “insuring” against it in the future.

Casualty insurance has morphed into a kind of miscellaneous insurance coverage that is used to provide coverage against rare, uncommon or other unclassifiable forms of risk. For example, if livestock are property then why does the Illinois consider it casualty insurance? What type of insurance would cover the loss of a beloved pet?

While casualty insurance is considered difficult to define and, in fact, some states use the term “miscellaneous” in conjugation with casualty insurance, it constitutes one of the most important segments of the insurance industry today. This is because originally, liability insurance was considered “casualty” insurance.

Liability insurance is growing in importance with the expansion of the medical industry and medical malpractice is one of the largest and most notable forms of causality insurance available for use today. Another is title insurance and few people in the US today have not had some experience with title insurance. If you have bought a car or a house, title insurance was used to protect the parties involved against potential loss resulting from a false or incomplete title assignment.

In times past, well before the advent of modern communications, it would often be the case that upon the purchase of a farm or home, a previously “unknown child of the previous owner” would turn up. That “unknown child” would come demanding compensation and a title insurance policy would protect the buyer of the property against any loss that might result from this “unknown child.”

Title insurance is just as relevant today in the sale of used vehicles as often stolen vehicles are passed off as legitimate, although this is becoming less prevalent as information technology improves. What would body-parts insurance be considered; health, accident or liability? Celebrities often contract for body-parts insurance.

 For example, the famous actress Betty Grable insured her legs for one million dollars. The actual risk was to her income generating potential and the loss to the studio if they where lost in an accident. Would you consider this workers compensation coverage or accident insurance? This is the role of casualty insurance, to cover risks that are demonstrable but, difficult to classify.

People who buy cars, whether new or used, will need to purchase an automobile insurance policy. While many people purchase only the minimum legal amount to save some money, opting for Limited Tort can actually be more expensive in the end, especially should the driver be in an accident and the other person sues the driver for liability. Limited Tort places a cap on the amount the insurance policy will cover should the driver be in an accident.

This means that if there are any other costs, the victim, or the person suing the insured, must make a liability or personal injury claim with a civil, or small claims court. This can mean thousands, or millions, of dollars in damages that must eventually be paid by the driver should the courts rule in favor of the plaintiff. 

A casualty insurance policy can help curb these costs. Casualty insurance, purchased in conjunction with the usual auto insurance can cover any losses, up to the amount of the casualty policy, that are a direct result, or in direct relation to the loss caused by an accident.

For example, should a driver cause an accident and the injured party sues him in small claims court, the casualty insurance policy will cover these damages. In addition, any property damage or medical bills not covered by the auto insurance policy could also be covered by the casualty insurance policy in place, up to the amount of the policy. While casualty insurance and auto insurance policies together can make monthly premiums much more expensive, not having both of these policies in place could potentially be even more damaging and expensive.

If you were to hear the term “casualty insurance” for the first time, your first reaction might be “…why would I need that?” However, chances are that you probably already have casualty insurance, or you might be looking for a policy now. The three biggest forms of casualty insurance are vehicle insurance, flood insurance and liability insurance.

The general definition of casualty insurance is coverage that protects against unforeseen or accidental events. This would make it similar to the Open Perils form of property insurance. Casualty insurance protects you against losses that arise from accidental events. This is different from property insurance, which comes in two forms, open or named perils types; which protects against the results of the event itself.

Liability insurance is the most recognizable form of causality insurance to date as it covers losses that result from an event rather than the direct loss. Flood insurance is a specialized form of property insurance that protects the property owner against not only the loss of, or damage to a property resulting from flooding, but it can also cover the cost of living while the home is being made whole again, as well as other unforeseen expenses usually not paid for with any other insurance type.

In the case of vehicle insurance often the majority of loss does not arise from the loss of a vehicle but repairs to vehicles, loss of property in a vehicle and other losses that could not have been planned for or anticipated. This is the nature of casualty insurance, the protection of businesses and individuals from losses that could not have been anticipated like a volcanic eruption or an object falling from space. Both of these have been covered in recent years.

Two of the most serious and important types of insurance in force today are Political risk insurance and Terrorism insurance. The latter is obvious with all of the coverage of the war on terrorism in the news. The one of the single biggest insurance losses in history was covered under a terrorism insurance policy, that being the World Trade Center disaster of 2001.

The estimate of the total loss was $36 billion dollars. This included $7 billion claimed for the buildings themselves, other property losses and sadly, the over 2800 people that lost their lives. Casualty insurance has evolved to cover all losses that arise from unforeseen risks such as these.

This would classify it as a form of Open Perils insurance. This is the term used to describe one of the main forms of property insurance. Property and Casualty insurance is one of the main forms of insurance but they are separate forms of coverage. Not all casualty insurance is property related in the strictest sense and not all property insurance is casualty related.

Damages to a property due to accident that do not result in total loss are considered casualty coverage. While you may never be in a position to require political risk coverage, you will likely be involved with and need casualty coverage at some point, if not already. Understanding insurance is as important as knowing that you need it. As complex as insurance is, always learn before you buy to insure your investment. Casualty insurance is what you are looking for when you are facing an unusual situation or potential loss. Knowing that it exists can protect you in the future.

One of the most important forms of casualty insurance is credit insurance. There are two forms of this type of coverage; Business Credit insurance and Consumer Credit insurance. The first and foremost reason for the distinction is that business and consumers are treated differently when it comes to loans and credit in general. This results is different risks and therefor, different insurances.

The simplest way to understand the difference between these  types of coverage is as follows; Business credit insurance is purchased to insure the payment of credit extended by the business. This would be business loans, capital credit (used to cover the cost of manufacturing machinery) and other debt arising from business activities.

Consumer credit insurance is purchased by consumers to insure the payment of credit extended to the consumer. This could be credit card debt, automobile or other vehicle loans and mortgage insurance. This has become a very big business in the last 30 years as the amount of credit extended to consumers has grown exponentially. The recent economic down turn is being blamed on a form of consumer credit insurance dealing with mortgages.

This is called the Credit Default Swap or CDS. Developed in the early 1990′s, by 2007 there was over $62 trillion in coverage. By 2008, just one year later the total amount of CDS policy coverage had dropped to $38 trillion. Credit Default Swaps are a form of consumer credit insurance as the instrument protects the business (banks, finance companies, etc…) against the consumer defaulting on the loan.