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Physical Damage Coverage

Physical Damage Coverage

Physical Damage is a general term for a group of insurance coverages that protect your vehicle. This general term includes collision insurance, as well as your choice of comprehensive insurance or the more limited fire and theft with combined additional coverage (CAC) insurance.

Collision insurance provides protection for your vehicle if it is damaged in an accident. Collision insurance pays to repair or replace your vehicle if it:

  • Collides with another object
  • Overturns or rolls

Comprehensive insurance provides protection for your vehicle if it is damaged by something other than a collision with a vehicle or object, or if your vehicle is stolen.

Fire and theft with CAC provides similar protection to that of comprehensive insurance, except its coverage is limited to certain specific, non-collision incidents. For example, fire and theft with CAC does not cover windshield claims.

Who Needs Physical Damage Coverage?

If you have a loan on your vehicle, or if your vehicle is leased, or if you want to fully protect your vehicle, you should choose physical damage insurance.

  • Collision insurance will provide protection in case of a collision.
  • Comprehensive insurance will provide protection against almost everything except a collision with another vehicle or object.
  • Fire and theft with CAC insurance is a limited form of comprehensive insurance that may be selected as a way to reduce your premium.

If your vehicle is leased, or you have a loan on it, you probably will be required to have physical damage insurance. If your vehicle is fully paid for, physical damage coverage is optional.

Physical Damage Coverage Deductibles and Other Details

For physical damage insurance, you must choose a deductible. The deductible is the amount that you agree to pay out of pocket when you have a claim.

Choosing a higher deductible is an easy way to lower the price of your insurance premium. Be sure you choose a deductible that you can afford to pay out of pocket at any time.

When you select physical damage insurance, you also are required to submit a stated amount, which is your best estimate of the current value of your vehicle. The stated amount should take the age and condition of your vehicle into account, as well as any permanently attached equipment.
Learn more about stated amount and how to calculate it for your vehicle.

Physical Damage Coverage Examples

Example 1:
You’re driving down the street when you hit a patch of ice. You lose control of your vehicle and run into a telephone pole.

Your collision insurance will pay for damage to your own vehicle because this was an accident in which you collided with another object.

If you selected a $1,000 deductible, you would pay the first $1,000 to have your vehicle repaired or replaced, depending on the extent of the damage. Your collision insurance would then pay the rest of the repair or replacement costs, up to the stated amount that you submitted.

Example 2:
You leave your house one morning and realize that your vehicle has been stolen.

Because the loss was due to an incident other than a collision, either comprehensive insurance or fire and theft with CAC insurance would be used.

If you chose a $1,000 deductible, you would pay the first $1,000 to replace your vehicle. Your comprehensive insurance or fire and theft with CAC insurance would then pay the rest of the cost to replace your vehicle, up to the lower of: the actual cash value (ACV) of the vehicle; or the stated amount that you submitted.