Property vs Casualty Insurance: What's the Difference?

This is the most fundamental concept on the Texas P&C exam, and it's simpler than most study materials make it:

• Property insurance protects your stuff — your home, car, business equipment, personal belongings. It pays when your property is damaged or destroyed.
• Casualty insurance protects your wallet — specifically, your legal liability when you cause harm to someone else. It pays when you're responsible for another person's injuries or property damage.

Think of it this way: property insurance is about what happened to your things, casualty insurance is about what you did to someone else's things (or someone else).

Property insurance covers physical assets against loss or damage. The main categories you'll see on the exam:

Personal lines (individuals):

• Homeowners policies (HO-1 through HO-8): The most-tested area. Know the difference between basic (HO-1), broad (HO-2), special/open peril (HO-3), renters (HO-4), comprehensive (HO-5), condo (HO-6), and older homes (HO-8).
• Dwelling policies (DP-1, DP-2, DP-3): For properties that don't qualify for homeowners — rental properties, vacant homes, investment properties.

Commercial lines (businesses):

• Commercial property: Covers buildings, equipment, inventory, and business income.
• BOP (Business Owners Policy): Package policy combining property + liability for small businesses.
• Inland marine: Covers property in transit or movable equipment.

Exam tip: The difference between named perils and open perils (special form) comes up repeatedly. Named perils = only listed events are covered. Open perils = everything is covered unless specifically excluded.

Casualty insurance covers your legal liability — the money you owe others when you cause harm. Key types:

Personal lines:

• Personal auto: Liability (bodily injury + property damage), collision, comprehensive, uninsured/underinsured motorist, PIP. Texas minimums: 30/60/25.
• Personal umbrella: Extra liability coverage above your auto and homeowners limits.

Commercial lines:

• CGL (Commercial General Liability): The workhorse business liability policy. Covers bodily injury, property damage, personal/advertising injury.
• Workers' compensation: Covers employee on-the-job injuries. Texas is unique — it's the only state where workers' comp is not mandatory for most private employers (but there are consequences for opting out).
• Professional liability (E&O): Covers errors and omissions in professional services.

Exam tip: The casualty section is the largest on the exam (~23 questions). Know your auto coverages cold — they're heavily tested.

You'll notice the exam is called "Property and Casualty" — not two separate tests. That's because most insurance products bundle both types of coverage.

A homeowners policy, for example, includes both property coverage (damage to your home and belongings) and liability coverage (someone gets hurt on your property). A business owners policy (BOP) works the same way.

The P&C license lets you sell both types, which is why you need to understand both for the exam and your career.