What Is Physical Damage Coverage for Car Insurance?

Physical damages coverage is a term used to mean the coverages you buy to protect your automobile against the damages it may suffer. By buying Collision and Comprehensive coverage together, you protect your own car against most perils like traffic accidents, fire, theft, vandalism, flood, storm, hail and most other weather related and accidental happenings. So, they provide you the physical damages coverage you need and they will be listed on your policy declaration page, instead of a coverage named “physical damage”.

A liability only policy pays for damages and injuries you may cause to other people in an accident you are at fault and there are no provisions for your own vehicle. You can rectify this situation by adding Collision and Comprehensive to Liability and other state required covers.

Most people who own expensive enough vehicles would want to protect their investments in case something happens to it. With Collision and Comprehensive included in your car insurance policy, your vehicle would be repaired or replaced if it is involved in an accident, collides with a deer, burns down in a house fire, damaged by hurricane and many other incidents.

Both Collision and Comprehensive come with deductibles, which require you to pay your predetermined contribution to each and every claim. They are usually set between $250 – $500 and you can increase deductibles to save money on premiums, which usually go down when the out-of-pocket expense increases.

Your lender or lessor would also want the vehicle to be protected against above-mentioned physical damages as they have financial interest in the car. Lenders usually require full coverage auto insurance and GAP coverage and they won’t release the funds unless the coverage is confirmed. Usually, their name is listed on the policy and your insurer will let them know if you let your policy lapse.

When your vehicle’s value depreciates enough, you may decide that it isn’t worth insuring anymore and it is time to save money to buy another automobile. Even with its depreciated value, it would cost a lot of money to keep Collision and Comprehensive. To give a rough guide, state required minimum liability only auto insurance costs $622 on average in the US and the average full coverage cost is $2014. You may have to pay the remainder of your auto loan for the lender to release you from buying those optional protections.

A full coverage policy is a combination of Liability and Physical Damages protections that pays when other people make a claim on your policy because you caused them injuries and damages, as well as paying for damages to your own auto.

Motorists can add a few more optional add-ons to their policies like Roadside Assistance, Rental Car Reimbursement and Uninsured Motorists Coverage (if it isn’t already part of the state required minimum coverage).

There are a few terms in auto insurance like full or physical damages coverage that aren’t actually a coverage but a name used for combination of coverages. They make it easier to explain what they do. For example, many people in the industry use the term physical damage to explain you need coverage to protect your automobile, rather than keep saying Collision and Comprehensive. Those two real vehicle insurance terms don’t explain their purpose as well as the phrase “physical damage” does.

So, your policy’s declaration page would list Liability, Collision and Comprehensive coverage but it won’t list physical damage or full coverage. Yet, your agent would understand you clearly if you say you want to have full coverage or want to protect your auto against physical damages. That is why it is important to know what they mean.