Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Content Writer & Entrepreneur Shuman Roy

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Jun 28, 2022

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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 policy, but what is physical damage coverage?

Liability auto insurance only covers property damage and bodily injury of the other car and driver 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 coverage and what it covers.

Plus, you can start getting quotes to compare auto coverage today. Enter your ZIP to see who has the best physical damage coverage at the best price.

Does physical damage coverage protect 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, and sometimes even if you do have protection, there are coverage limits set by your insurer.

First, let’s talk about what physical damage coverage actually means. 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 a 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’ which stands for ‘other than collision, this 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 and if there are any policy limits in place, 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.

You may be tempted to do so in order to pay less, but keep in mind that if you pay for the service, you don’t have to pay for any medical expenses or other forms of reimbursement out of your own pocket should you be involved in an accident, and not have the proper coverage.

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

Average Annual Car Insurance Rates by Coverage Level
CompaniesAverage Annual Rates
for Low Coverage
Average Annual Rates
for Medium Coverage
Average Annual Rates
for High Coverage
Allstate$4,628.03$4,896.81$5,139.02
American Family$3,368.49$3,544.37$3,416.40
Farmers$3,922.47$4,166.22$4,494.13
GEICO$3,001.91$3,213.97$3,429.14
Liberty Mutual$5,805.75$6,058.57$6,356.04
Nationwide$3,394.83$3,449.80$3,505.37
Progressive$3,737.13$4,018.46$4,350.96
State Farm$3,055.40$3,269.80$3,454.80
Travelers$4,223.63$4,462.02$4,619.07
USAA$2,404.11$2,539.87$2,667.92
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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 and you’re only carrying the minimum coverage needed.

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What are some examples of auto physical damage insurance?

Collision and comprehensive are very different and cover different damages to your car. You may even find that depending on what sort of vehicle you have and what your driving history looks like, you are required to have both types on your auto coverage policy. This is usually for the financial protection of not just you and your property, but also your provider as well.

For informational purposes, these examples will show you the difference between the two of them, and why it’s a good thing to have extra protection.

What is physical damage coverage?

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

Suppose Jenny backs her car into a cement pole in a gas station parking lot. In that case, 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; it would be a covered accident because she has collision even if she’s the at-fault driver.

Collision is a generally inexpensive option to add to your car insurance. However, it would be less expensive when put up against the replacement cost of a new vehicle, should yours become totaled.

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.

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 another 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

You may have noticed that the comprehensive physical damage insurance definition does not include any damage from a collision itself. You have to have separate collision coverage to be insured in an accident. The coverage amounts vary depending on which one you choose.

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
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You can add both collision and comprehensive coverage to your policy for around $25 a month. Your car is then covered on multiple fronts from physical damage because you took both policy service options. Now there are other types of coverage, but keep in mind that the average cost of your policy would go up should you choose to add them. Here are a few examples:

  • Dealers physical damage coverage: It covers physical damages for anything from jet skis to autos, trucks, etc. being held in a dealer’s inventory for resale.
  • Commercial physical damage coverage: Coverage for the cost of repairs to or replacement of your car in the event that it is damaged or stolen.
  • Garage keepers physical damage coverage: It covers a garage business for any loss to a customer’s car left in their care or control.

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Is physical damage insurance coverage mandatory with a lease or a 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).

What is hired physical damage coverage? Coverage for bodily injury and property damage caused by a car you rent, hire, or borrow as well as by cars owned by others, such as employees.

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, as it is usually offered as optional coverage. 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 basic coverage for aftermarket stereo equipment, which isn’t normally covered, for an additional fee.

It is usually best to have some form of property damage coverage to protect what is yours, and the same can be said about your vehicle. It’s your personal property after all, and unfortunately, there can be some less than savory conditions that lead to an accident. Better to have a higher monthly payment than be on the wire for another motorist and their medical payments.

You can always talk to your provider about your policy details and limits, but if you think you may need more information, you can always look around.

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 affordable quotes for physical damage auto insurance coverage.