How are property damage damages measured in casualty insurance?

In casualty insurance, property damage damages are measured by the actual monetary loss suffered by the injured party. This approach focuses on the direct financial impact experienced by the person or entity whose property has been damaged. The rationale behind this method is to ensure that the injured party is made whole again, which involves compensating them for the specific financial losses they incurred as a result of the damage.

This measurement accounts for various factors, including the cost of repairs, any loss of use, and sometimes even diminished value if the property is not restored to its original condition. It aims to assess the real economic harm rather than relying on estimates or generalized figures like market value or average costs, which may not accurately reflect the individual circumstances of the loss. By focusing on the actual monetary loss, the casualty insurance framework aims to provide a fair and precise compensation based on the real impact of the loss on the affected party.