What is 'Personal Lines Insurance'

Property and casualty insurance products for individuals. Personal insurance lines help protect individuals from potential losses they couldn’t afford to cover on their own and makes it possible to do things like drive a car and own a home without risking financial ruin. Personal lines insurance and commercial lines insurance each make up about half of the overall insurance market.

BREAKING DOWN 'Personal Lines Insurance'

Personal lines insurance include products such as homeowners insurance, flood insurance, earthquake insurance, renters insurance, automobile insurance, life insurance, disability insurance, umbrella insurance and health insurance. These products protect individuals and families against potentially crushing financial losses caused by fire, theft, natural disasters, death, accidents, lawsuits and illness.

Some types of personal insurance, such as automobile liability insurance and, under the Affordable Care Act, health insurance, are required by law. Others, such as comprehensive and collision automobile insurance and homeowners insurance, can be required by lenders when property is used as loan collateral. The amount of insurance coverage available generally depends on how much the individual is willing to pay in premiums; the more someone is willing to pay, the more insurance they can obtain. However, individuals may be unable to purchase a policy for a particular risk if they pose too great of a risk to the insurance company. For example, someone with a history of cancer might not be able to purchase life insurance. In other cases, high-risk individuals can still purchase insurance, but will have to pay above-average premiums to compensate the insurer for the extra risk. An example is high-risk auto insurance for drivers who have been at fault in multiple accidents over a short time.

Personal lines won’t cover every risk an individual might face, but they can dramatically reduce the dollar amount of potential losses. Individuals can usually tailor each policy’s coverage and deductibles to strike the right balance between the amount of coverage and the cost of premiums.

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