Property Damage Liability vs. Physical Damage Coverage
The difference between property damage liability vs. physical damage coverage is that property damage liability covers the damage you cause to another vehicle or property while physical damage covers your vehicle. Liability insurance is usually required by state insurance laws while physical damage coverage is optional, but we recommend carrying both even if it may raise your rates. You can find cheaper car insurance rates here with our free quote comparison tool below.
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Jeff Root
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Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
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UPDATED: Jan 8, 2024
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Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Jan 8, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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Insurance can be difficult to grasp. Many of the terms used to express coverage sound similar but have completely different meanings.
For example, property damage liability and physical damage coverage are two of the most commonly misunderstood and confused types of coverage.
While they almost sound exactly the same on the surface, the difference between property damage liability vs. physical damage coverage is vast and often mixed up by consumers.
Is property damage insurance liability coverage?
The easiest way to clear things up is to state that property damage insurance is a type of liability coverage.
And liability insurance coverage always refers to damages to another person’s vehicle, property, and/or belongings that results from an automobile accident you caused.
All states require drivers to carry at least a mandatory minimum car insurance policy that includes this coverage. States’ minimum insurance requirements generally include property damage liability coverage and bodily injury liability coverage. However, the mandatory minimum coverage limits differ from state to state.
Property damage liability insurance is part of a car insurance policy and it typically covers the cost of repairs if you are at fault for an auto accident that damages another vehicle or property. Property damage liability insurance does not cover damage to your own vehicle. For this cause, you may want to consider another coverage type such as collision coverage or comprehensive insurance to cover the repair cost to your own vehicle or property.
Much like bodily injury liability insurance, property damage coverage operates on a per accident basis.
The liability limits on your insurance policy are typically expressed in the following manner: 250/100/25.
Your policy’s property damage coverage 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).
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What does physical damage refer to?
On the other hand, physical damage coverage refers to damage to your own vehicle.
It is further broken down into two sub-categories, including collision insurance and comprehensive coverage. So, physical damage is a general term for collision coverage and comprehensive coverage.
Collision insurance provides protection for your vehicle if it’s damaged in an accident or collides with another object, overturns or rolls. Comprehensive insurance provides protection for your vehicle if it’s damaged by anything else other than a collision or if your vehicle is stolen.
Another way to differentiate is that 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 an auto 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.
Contact your independent agent or insurance company if you have questions or are unhappy with your current auto insurance policy coverage or rate.
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Jeff Root
Licensed Insurance Agent
Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.