Insurance isn’t just a compliance formality — it’s one of the most complex and potentially consequential contracts a business will ever sign. Yet despite its importance, most companies don’t have lawyers review their property and casualty (P&C) policies. Instead, they rely on brokers — who, while often knowledgeable and client-focused, are also salespeople.

The irony isn’t lost on anyone who’s actually tried to parse these policies. Written in archaic, legalistic language, insurance contracts are not easy to understand. Between exclusions, exceptions to exclusions, endorsements, and undefined terms, even seasoned attorneys can struggle to interpret what’s actually covered.

This article unpacks how legal and financial professionals can shop for insurance with more clarity — and fewer surprises — in an increasingly high-stakes market.

What’s the Difference Between Property and Casualty?

• Property insurance covers damage to physical assets like buildings and equipment. It often includes business interruption coverage, which replaces lost income when operations are shut down due to a covered event.
• Casualty insurance addresses legal liability. It covers obligations if someone is injured on your premises, sues for damages caused by your operations, or is harmed by a defective product. Casualty policies typically include legal defense costs, settlements, and judgments.

Dr. David Pooser, a professor at East Carolina University, emphasizes the need to distinguish these categories. Property losses are often immediate. Liability claims can unfold slowly, sometimes over years.

Commercial vs. Personal Coverage

While personal and commercial insurance may look similar, they function differently. Jeff Gibson from Towne Insurance points out that commercial policies are tailored to specific business risks — from professional liability to auto fleets and directors and officers (D&O) coverage.

Personal insurance policies are standardized for individual needs — like auto or homeowners insurance. If you’re a sole proprietor or consultant, relying on personal insurance for business risks may create gaps that won’t be covered when it matters most.

Agents vs. Brokers: Who Represents You?

Gary Kirshenbaum of Alera Group explains that agents typically work for insurers, while brokers work for clients. This has legal implications: brokers are obligated to find the best terms and coverage for their clients, while agents may be limited to offering products from one carrier.

Independent agents sometimes bridge this gap, representing multiple insurers while advocating for the client. But it’s essential to clarify these roles. Misunderstandings in representation can impact policyholder rights in claims disputes.

Evaluating Insurance Professionals

Designations like CPCU, CIC, or ARM demonstrate technical knowledge and ethics, but experience and communication matter just as much. According to Jeff Gibson, a good insurance advisor explains terms clearly, is proactive about renewals, and advocates for the client.

The best professionals can balance technical skill with responsiveness and trustworthiness.

Start the Process Early

Gibson and Kirshenbaum recommend beginning the shopping or renewal process 90 to 120 days before your policy ends for commercial insurance and around 60 days for personal insurance. Waiting too long can limit your options and create last-minute stress.

Switching brokers? Do it right after your renewal, when there’s time to evaluate your existing coverage and compare alternatives.

Is Your Insurer Financially Strong?

Insurance is a promise to pay in the future. Dr. Pooser underscores the importance of working with carriers that have solid financials. Look to A.M. Best, S&P, or Moody’s for credit ratings. The NAIC Consumer Information Source also provides complaint trends.

Understanding Coinsurance Clauses

Brenda Wells, director of the East Carolina University Risk Management and Insurance Program, cautions that coinsurance clauses are often misunderstood. These clauses require property to be insured for a certain percentage of its value (typically 80% to 90%). Failure to meet that threshold can result in a penalty, even on partial losses.

Claims-Made vs. Occurrence Coverage

Dr. Pooser explains that liability insurance comes in two flavors: claims-made and occurrence-based.

• Claims-made policies cover claims filed during the policy term, even if the incident occurred earlier (as long as it’s after the retroactive date).
• Occurrence policies cover events that happen during the policy term, even if the claim is filed later.

Professionals in fields like law and accounting often use claims-made policies and should consider tail coverage to extend protection beyond the policy period.

Legal Clauses To Watch

Two important provisions to understand are the resulting-loss exception and the non-cumulation clause:

• Resulting-loss exceptions allow coverage for damage that results from an excluded peril. For instance, if faulty plumbing causes water damage, the water damage may be covered even if the plumbing work isn’t.
• Non-cumulation clauses cap the insurer’s total payout across policy years, even if a claim spans multiple terms. This can affect long-tail liabilities like environmental claims.

Policy Enhancements Worth Considering

Many policyholders overlook valuable coverage additions. These include:

• Cyber liability endorsements for data breaches and ransomware attacks.
• Employment Practices Liability Insurance (EPLI) for workplace lawsuits.
• Umbrella policies that add liability protection above existing limits.
• Business interruption coverage that includes extra expenses like relocation or overtime.

Common Pitfalls To Avoid

Business owners and professionals often make a few avoidable mistakes including:

• Shopping based only on premium.
• Underinsuring high-value property.
• Ignoring exclusions or sublimits.
• Failing to consider umbrella or tail coverage.

Kirshenbaum points out that underwriters track quote activity. Constantly shopping without changing carriers may hurt your standing with insurers.

Current Market Challenges

Kirshenbaum and Wells note that today’s insurance market is especially tough. Rates are rising due to inflation, climate risks, and high litigation awards (‘nuclear verdicts’). Insurers are tightening underwriting and exiting certain markets altogether.

A Strategic Asset, Not Just a Requirement

Insurance isn’t just a compliance tool. As Brenda Wells emphasizes, it’s a critical component of a well-run risk management strategy. Legal and financial professionals should treat insurance policies as contracts, read them carefully, and work with experts who explain the implications.

Good insurance is more than coverage — it’s clarity, continuity, and confidence.

To learn more about this topic, view Corporate Risk Management / Shopping for Property and Casualty Insurance Released On-Demand. The quoted remarks referenced in this article were made either during this webinar or shortly thereafter during post-webinar interviews with the panelists. Readers may also be interested to read other articles about property and casualty insurance.

This article was originally published on May 12, 2025.

©2025. DailyDAC^TM, LLC d/b/a/ Financial Poise^TM. This article is subject to the disclaimers found here.