Property and casualty insurance provides indemnity from exposure to risks associated with damage to persons and property. The assessment of a particular exposure to risk must be determined before an effective risk management strategy can be designed. A risk management strategy will determine what risks to be insured and what risks are to be self-insured. A rule of thumb is to insure risks that are catastrophic in nature and self-insure those risks that can be paid form anticipated cash flows. The types of property and casualty insurance policies are for the different hazards:
- Auto Insurance
- Homeowners Insurance
- Liability Insurance
- Business Insurance
Property and casualty insurance policy premiums can vary based on how the contract terms are structured including deductibles, policy limits and floaters added to the base contract. A higher policy deductible is a self-insurance that is financed through future premium savings. Policy limits are selected based on the assessed exposure to a particular risk. There is no economic reason to over-insure an exposure to a particular hazard.
A financial advisor will help you understand what your financial exposures are from potentially catastrophic losses from various hazards and the property and casualty insurances that are required. You will understand your property and casualty insurance options are to protect your ability to reach your True North.
