Property damage liability coverage is third-party liability protection and is required in most parts of the United States. It pays for the cost of repairs to the other driver’s vehicle if you are involved in an at-fault accident.
This type of coverage also pays for the cost of repairs to public property damaged or destroyed in at-fault accident. In this instance, public property refers to items such as mailboxes, light stands, signposts, guardrails, fences and buildings.
Minimum Level of Coverage Required
The minimum level of property damage liability coverage required varies by state. Each one determines whether this coverage will be required for all drivers and the minimum level of protection that must be kept in place.
Drivers have the option of buying the policy with a higher limit if they wish. The minimum amount required under state law may not be enough to fully pay for the damages caused if the collation is a serious one.
When considering how much coverage to buy, a consumer needs to look at what would happen if he or she was the at-fault driver in an accident involving multiple vehicles or considerable damage to public property. In most cases, it’s a good idea to buy a policy with a higher limit than the minimum required under state law.
Physical Damage Auto Insurance Coverage
Property damage liability coverage does not pay for the cost to repair the policyholder’s own vehicle. If a driver wants to put this type of protection in place, he or she will need to add collision and/or comprehensive insurance to the policy.
Collision auto insurance coverage pays for the cost of repairs to the policyholder’s vehicle following an incident which involves coming into contact with another object. The policyholder would be required to pay a deductible before his or her auto insurance company will pay out on the claim.
Comprehensive auto insurance coverage is used when the loss is due to something other than a collision. Examples of the types of losses covered under the comprehensive part of a policy include fire, theft, vandalism, wind, and hail. The policyholder will need to pay a deductible before the insurance company will pay out on these types of claims as well.
When to Drop Physical Damage Coverage
Physical damage coverage makes good sense for new vehicles. If the owner took out a loan to pay for the car, the financing company will likely insist that full coverage (collision and comprehensive) be kept in place until the cars been paid off in full to protect its financial interest.
Once the car is paid off in full, the owner can consider dropping the physical damage coverage. Since this type of insurance pays out based on the vehicle’s cash value if the total loss occurs, it may not be to the owner’s advantage to keep full coverage in place if its value is at or below the policy deductible.