Casualty

Casualty insurance is an umbrella term to describe the coverage provided by a number of different types of insurance, ranging from vehicle insurance to workers’ compensation (where applicable) and from liquor liability to product liability. Because the category of casualty insurance is so vast, it's often confusing to understand. The underlying premise is that most types of insurance policies covering loss or damage to third-party property, as well as liability to other individuals, will fall under the description of casualty insurance.

Examples of things covered by casualty insurance would be third-party property loss (e.g., as the result of burglary), vehicle damage or total loss, workers’ compensation (where applicable), and liability claims against companies. These liability claims might include anything from slip-and-fall accidents in a store or restaurant to claims of damage or injury resulting from use of a product.

Because casualty risk can be managed by many types of insurance, it would be challenging to try to name every type of coverage. 

Almost any adult and any business needs some form of casualty insurance. Most countries require automobile owners to have some form of insurance, if not for their own vehicle, then at least for liability for damages or injury caused to others in the event of an accident. Business owners need casualty insurance, especially those who have a physical presence such as a store or office, have employees working for them, or produce a product.

The total cost of risk (TCOR) is defined in simple terms as the comprehensive cost of managing risks and incurred losses. Factors contributing to TCOR include any aspect of an organization’s operations that is related to its risks, from administrative costs to the expenses involved with developing and implementing a risk control strategy, as well as any uninsured losses.

There are five broad categories that comprise TCOR:

• Premium: The cost involved with transferring risk to an insurer, including fees.
• Losses: All losses for which a claim is made, including the claim deductibles.
• Claims administration: The cost of managing risk, both internally and externally.
• Cost of collateral: The cost of securing your obligations under deductible programs.
• Implied risk: The exposure to volatility that you may not have recognized in your current experience.