Insurance can be difficult to grasp. Many of the terms used to express coverage sound similar but have completely different meanings.
Property damage is a type of liability coverage. Liability coverage always refers to damages to another’s vehicle, property, and/or belongings that results from an accident you caused.
All states require drivers to carry at least a mandatory minimum car insurance policy. The liability limits on your insurance policy are typically expressed in the following manner: 250/100/25. Your policy’s property damage limit is represented by the third number in the series, in this case “25.”
This means your insurance company will pay up to $25,000 for damage to other people’s property that you cause for one accident. This is regardless of how many cars you damage. The other two numbers in the series above are explained here (auto insurance liability limits).
This type of coverage is not mandatory according to state law. However, you are typically required to carry this coverage on a vehicle if it’s leased or you owe money on a loan you took out to pay for the vehicle.
Anyone who owns the car while you are financing/leasing it, referred to as the loss payee, or lienholder, will require this coverage be purchased in order to protect their interest in the car. Their concern is that their loan/lease won’t be repaid if a car is totaled and no longer drivable.