Casualty insurance

Casualty insurance

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Casualty insurance, often equated to liability insurance
Liability insurance
Liability insurance is a part of the general insurance system of risk financing to protect the purchaser from the risks of liabilities imposed by lawsuits and similar claims. It protects the insured in the event he or she is sued for claims that come within the coverage of the insurance policy...

, is used to describe an area of insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

 not directly concerned with life insurance, health insurance, or property insurance. It is mainly used to describe the liability
Legal liability
Legal liability is the legal bound obligation to pay debts.* In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft...

 coverage of an individual or organization's for negligent acts or omissions. However, the "elastic" term has also been used to describe property insurance
Property insurance
Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance or boiler insurance. Property is insured in two main...

 for aviation insurance, boiler and machinery insurance, and glass and crime insurance. It may include marine insurance
Marine insurance
Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination....

 for shipwrecks or losses at sea or fidelity and surety insurance. It may also include earthquake
An earthquake is the result of a sudden release of energy in the Earth's crust that creates seismic waves. The seismicity, seismism or seismic activity of an area refers to the frequency, type and size of earthquakes experienced over a period of time...

, political risk insurance
Political risk insurance
Political risk insurance is a type of insurance that can be taken out by businesses, of any size, against political risk—the risk that revolution or other political conditions will result in a loss....

, terrorism insurance
Terrorism insurance
Terrorism insurance is insurance purchased by property owners to cover their potential losses and liabilities that might occur due to terrorist activities....

, fidelity
Fidelity bond
A fidelity bond is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees....

 and surety bond
Surety bond
A surety bond is a promise to pay one party a certain amount if a second party fails to meet some obligation, such as fulfilling the terms of a contract...


One of the most common kinds of casualty insurance today is automobile insurance. In its most basic form, automobile insurance provides liability coverage in the event that a driver is found "at fault" in an accident. This can cover medical expenses of individuals involved in the accident as well as restitution or repair of damaged property, all of which would fall into the realm of casualty insurance coverage.

If coverage were extended to cover damage to one's own vehicle, or against theft, the policy would no longer be exclusively a casualty insurance policy.

The state of Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...

 includes vehicle, liability, worker's compensation, glass, livestock, legal expenses, and miscellaneous insurance under its class of casualty insurance.

In 1956, in the preface to the fourth edition of Casualty Insurance Clarence A. Kulp wrote:
It has never been possible really to define casualty insurance. Broadly speaking, it may be defined as a list of individual insurances, usually written in a separate policy, in three broad categories: third party or liability, disability or accident and health, material damage. One of the results of comprehensive policy-writing .... is to raise the question of the usefulness of the traditional concept of casualty insurance ... some insurance men predict that the casualty insurance of the future will include liability and disability lines only.
Later in Chapter 2 the book states that insurance was traditionally classified under life, fire-marine, and casualty. Since multiple-line policies began to be written (insurance contract
Insurance contract
In insurance, the insurance policy is a contract between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for payment, known as the premium, the insurer pays for damages to the insured which are caused by...

s covering several types of risks), the last two began to merge. Fire-marine and casualty were "portmanteau" terms. When the NAIC
National Association of Insurance Commissioners
The National Association of Insurance Commissioners is an Internal Revenue Code Section 501 non-profit organization which seeks to organize the regulatory and supervisory efforts of the various state insurance commissioners from around the United States. The NAIC was formed in 1871. Its current...

 approved multiple underwriting in 1946, casualty insurance was defined as a blanket term for legal liability except marine, disability and medical care, and some damage to physical property.

See also

  • Wiktionary:casualty
  • List of finance topics (Insurance)

External links