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What Is Physical Damage Coverage?

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Reviewed byJoel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/truthaboutins-live/2020/03/joel-ohman.jpg

UPDATED: Jul 29, 2020

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Here’s what you need to know…

  • Liability auto insurance does not cover physical damage to your car, just to the car you hit
  • Collision coverage is for when your car is damaged in an accident
  • Comprehensive coverage handles damage to your car not from an accident, like theft or a fire

When purchasing auto insurance, physical damage coverage can be purchased in addition to a liability-only insurance policy. Liability auto insurance only covers property damage and bodily injury of the other car if you cause an accident. It does not cover damages to your car or injuries to anyone in your car.

Full coverage auto insurance is a personal auto policy that includes both physical damage coverage and liability coverage. As the name implies, you are fully covered for damages to your car and others.

Keep reading to learn about physical damage insurance and what it covers.

Start getting quotes to compare car insurance coverage today. Enter your ZIP to see who has the best physical damage coverage at the best price.

Physical Damage Coverage Protects YOUR Vehicle

According to AAA, most states require some sort of minimum liability coverage, but most don’t require you to cover damages to your own car. This is usually voluntary.

First, let’s talk about what does physical damage mean? Physical damage is just like it sounds — damage to your vehicle, whether inside or out.

What is physical damage insurance, and what is exactly covered with auto physical damage coverage?

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

Collision coverage insurance – this covers damages to your car and injuries to people in your car if you cause an accident
Comprehensive car insurance – sometimes referred to as “Comp” or “OTC”, Other Than Collision, covers damages that don’t result from an accident

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

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.

Let’s look at how the amount of coverage you carry affects your auto insurance rates. This table shows you the difference between the cost of high or full coverage and low or liability-only coverage.

Average Annual Auto Insurance Rates by Coverage Level
CompaniesAverage Annual Rates
for Low Coverage
Average Annual Rates
for Medium Coverage
Average Annual Rates
for High Coverage
USAA$2,404.11$2,539.87$2,667.92
Geico$3,001.91$3,213.97$3,429.14
State Farm$3,055.40$3,269.80$3,454.80
American Family$3,368.49$3,544.37$3,416.40
Nationwide$3,394.83$3,449.80$3,505.37
Progressive$3,737.13$4,018.46$4,350.96
Farmers$3,922.47$4,166.22$4,494.13
Travelers$4,223.63$4,462.02$4,619.07
Allstate$4,628.03$4,896.81$5,139.02
Liberty Mutual$5,805.75$6,058.57$6,356.04
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Full coverage will cost you an average of $345 a month, and low coverage will cost around $313. As a general rule of thumb, the more coverage you have, the more your insurance will cost. It is important to note that full coverage costs more on the front end, but it can really save you out of pocket if something happens to your car.

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Physical Damage Coverage Examples

Collision and comprehensive coverages are very different and cover different damages to your car. These examples will show you the difference between collision and comprehensive coverages.

What is physical damage collision coverage?

Collision Insurance: Jenny has collision insurance on her new car.

If Jenny backs her car into a cement pole in a gas station parking lot, her collision coverage will pay for the damage to her vehicle because her accident falls under the definition of “collision” in her insurance policy. This is also true if she hits another car.

Collision is a generally inexpensive option to add to your car insurance. Take a look at the average annual auto insurance collision rates by state. Enter your state in the search box to see what it would cost to add collision coverage to your policy.

Average Annual Collision Auto Insurance Rates by State
StateAverage Annual Auto Insurance Rate for Collision
Alabama$146.28
Alaska$141.08
Arizona$184.20
Arkansas$183.36
California$99.29
Colorado$158.34
Connecticut$126.02
Delaware$113.23
District of Columbia$230.25
Florida$110.12
Georgia$153.61
Hawaii$100.09
Idaho$110.78
Illinois$117.98
Indiana$115.02
Iowa$171.58
Kansas$230.65
Kentucky$130.15
Louisiana$208.59
Maine$96.66
Maryland$146.77
Massachusetts$128.92
Michigan$147.02
Minnesota$173.04
Mississippi$194.74
Missouri$166.34
Montana$199.87
Nebraska$206.24
Nevada$116.79
New Hampshire$103.03
New Jersey$123.18
New Mexico$166.89
New York$156.66
North Carolina$123.00
North Dakota$227.64
Ohio$112.74
Oklahoma$201.56
Oregon$89.66
Pennsylvania$132.01
Rhode Island$122.17
South Carolina$165.38
South Dakota$228.59
Tennessee$135.62
Texas$186.70
Utah$106.57
Vermont$118.31
Virginia$129.89
Washington$104.11
West Virginia$195.04
Wisconsin$126.34
Wyoming$222.86
Countrywide$150.69
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They countryside average is only  $150 a year or $12.50 a month to add this important coverage.

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What is comprehensive physical damage coverage?

Comprehensive Car Insurance: Colin’s car is stolen from the driveway of his home.

The insurance company will pay for Colin’s car to be replaced as a result of having comprehensive coverage in his insurance policy.

In this example, the car was not damaged by way of a collision (running into an object, or rolling over as a result of the loss of control while driving), so collision coverage alone wouldn’t be sufficient to replace Colin’s car.

Comprehensive physical damage definition includes damages from the following:

•    Fire
•    Theft
•    Riot
•    Hail, water, or flooding
•    Explosion (including earthquake)
•    Vandalism – includes slashed tires and graffiti
•    Windstorm
•    Damage resulting from a bird, deer, or other type of animal
•    Breakage of glass – Please note, if broken glass is a result of a collision, be sure to claim it that way to avoid paying two deductibles
•    Missiles or falling objects – not missiles in the military sense, those are specifically excluded under “acts of war.” But if a tree limb fell on your car, it would be covered

That comprehensive physical damage insurance definition does not include any damage from a collision. You have to have separate collision insurance to be covered in an accident.

Now let’s look at the average annual auto insurance rate for comprehensive coverage. Like before, find your state to see how you compare to the countrywide average.

Average Annual Comprehensive Auto Insurance Rates by State
StateAverage Annual Auto Insurance Rate for Comprehensive
Alabama$146.28
Alaska$141.08
Arizona$184.20
Arkansas$183.36
California$99.29
Colorado$158.34
Connecticut$126.02
Delaware$113.23
District of Columbia$230.25
Florida$110.12
Georgia$153.61
Hawaii$100.09
Idaho$110.78
Illinois$117.98
Indiana$115.02
Iowa$171.58
Kansas$230.65
Kentucky$130.15
Louisiana$208.59
Maine$96.66
Maryland$146.77
Massachusetts$128.92
Michigan$147.02
Minnesota$173.04
Mississippi$194.74
Missouri$166.34
Montana$199.87
Nebraska$206.24
Nevada$116.79
New Hampshire$103.03
New Jersey$123.18
New Mexico$166.89
New York$156.66
North Carolina$123.00
North Dakota$227.64
Ohio$112.74
Oklahoma$201.56
Oregon$89.66
Pennsylvania$132.01
Rhode Island$122.17
South Carolina$165.38
South Dakota$228.59
Tennessee$135.62
Texas$186.70
Utah$106.57
Vermont$118.31
Virginia$129.89
Washington$104.11
West Virginia$195.04
Wisconsin$126.34
Wyoming$222.86
Countrywide$138.87
Get Your Rates Quote Now

You can add both collision and comprehensive coverages to your policy for around $25 a month. Then your car is covered on multiple fronts from physical damage.

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Physical Damage Coverage May Be Mandatory If You Have a Lease or Loan

The Insurance Information Institute says that 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).

The company that lent you the money for the car is listed on your policy as a Loss Payee, meaning if the car is damaged beyond repair, your insurance company will pay the lender the remaining balance of the loan on the vehicle so you are not responsible for it.

Even if your car is completely paid off, it’s a good idea to get both collision and comprehensive coverage if you want to be certain your car is repaired or replaced in the event it is damaged or stolen (assuming you can afford it).

One final note. Towing and Labor Costs coverage, if not already included in your physical damage coverage, can be purchased for your personal auto policy. This coverage would pay for your car to be towed, usually to a place of your choice within a certain distance.

This coverage would apply to your covered auto or a non-owned auto you may be driving.

Typically, you purchase this coverage for a predetermined amount per occurrence, somewhere between $25.00 and $75.00.  You may also purchase coverage for aftermarket stereo equipment, which isn’t normally covered, for an additional fee.

The best way to get all of the coverage you need at a price you can afford is to compare quotes from different companies. Enter your ZIP now to get quotes for auto insurance that includes physical damage coverage.

References:

  1. https://drivinglaws.aaa.com/tag/liability-laws/
  2. https://www.iii.org/article/insuring-leased-car

 

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