Physical Damage Coverage and your Car Insurance Policy

Auto Insurance Basics, Insurance Advice, Liability Insurance

Personal Or Commercial Car Insurance: Which Is Right For You?

What is Physical Damage Coverage on a Car Insurance Policy?

Physical Damage coverage on your auto insurance policy is coverage for damage done to your car. Now if someone else is at-fault, then their auto insurance would most likely pay for the damage. But when that is not the case, then damage to your auto is covered under physical damage coverage.

Physical Damage is a general term for a group of insurance coverages that protect your vehicle. Physical Damage insurance can be purchased in addition to a liability-only insurance policy.

Types of Physical Damage Coverage

There are two main types of physical damage coverage available on an insurance policy:

Collision insurance; and

Comprehensive car insurance (sometimes referred to as “Comp” or “OTC”, Other Than Collision).

Both are intended to cover any damage to your vehicle. It’s important to recognize which of these types of coverage you have on your policy to better understand your coverage.

Types of Damage

Each type only pays for specific causes of damage to your vehicle, and both can be purchased separately. Adding or removing either of these types of coverage could result in raising or lowering your insurance rates. As a rule of thumb, the more coverage you have, the more your insurance costs.

In most cases, you cannot obtain a vehicle without physical damage coverage if you are borrowing the money to buy a car (lease or loan).  Each physical damage coverage is subject to a separate deductible. For instance, you may choose Comprehensive Coverage with a $500 deductible and Collision Coverage with a $1,000 deductible. You can reduce your physical damage premiums by increasing your deductibles.

What Should you Do?

Should you buy physical damage coverage? The answer depends on:

  1. Age of the vehicle;
  2. Value of the vehicle;
  3. Condition of your vehicle; and
  4. The cost of physical damage insurance.

Your agent or broker can help you decide if physical damage coverage is worthwhile for you.


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