Physical Damage Insurance
If you’re looking for a car insurance policy, you would want to know your auto liability coverage options. You might want to start with physical damage insurance, without which you will have to pay out of your own pocket to repair or replace your vehicle in case of an accident.
What is Physical Damage Insurance?
Physical damage coverage is a general term that includes a group of insurance coverages for your vehicle if it is damaged. It mainly consists of two parts:
- Collision Insurance
- Comprehensive Insurance
Collision Insurance
Accidents can be costly in the damages they cause to your vehicle. Collision insurance covers the damages to your vehicle if it comes in contact with another vehicle or object, such as a street sign, garage door, etc. Any repairs to your car or truck will then be covered by this component of physical damage insurance.
What Does Collision Coverage Cover?
There is an extent to the damages that this aspect of physical damage insurance will cover. Here is an overview of the instances collision insurance will cover:
- A collision of your vehicle with another vehicle
- A collision with an object like a mailing post or street light
- A rollover accident involving your car only
- A person crashing into your parked vehicle
- Accident in a rented car
If you are in a collision accident where another driver is at fault, you will make a claim to their property damage insurance first. Although this type of insurance is mandatory in most states, the minimum coverage limits are usually very low. Due to this, the at-fault driver may not have enough to cover for the damages to your vehicle. This is where your collision insurance can help.
Collision Insurance Does Not Cover:
- Theft
- Vandalism
- Medical bills from injury to another driver
- Any losses suffered beyond the vehicle
For the protection of the above, you may want to apply for comprehensive insurance, bodily injury liability insurance, and liability auto insurance.
Do I Need Collision Insurance?
Collision coverage isn’t necessarily required by the state, but many lenders require that you are covered by this part of physical damage insurance if you lease or finance a car.
If you own a car, and wondering whether you need collision coverage, there are three things to take into account:
- The Value of your vehicle
- Deductible amount
- Personal Finance Situation
Understanding Deductibles
Generally, collision insurance is dependent on a deductible. This is a set amount subtracted from a collision claim. It is basically the amount you pay before your coverage pays for the claim. The deductible is decided when you purchase physical damage insurance.
The lower your deductible, the higher your premium will be. As part of your covered claim, you will have to pay the deductible out of your pocket for the repair of the vehicle. The common range for deductibles is between $250 and $1000. If you choose $500 as your deductible, you will have to pay $500 for the repair costs a part of a covered claim.
How to Set a Deductible?
The amount you set as your deductible will depend on the value of your car. Fastline Insurance will work with you to decide a deductible amount suited for your needs.
Should I opt for Collision Coverage?
There are a few things you should consider when applying for physical damage coverage. Collision coverage will never pay more than your car’s value, so it naturally depreciates over time as your car loses its original value.
Here are a few steps you could follow:
- If your collision deductible is set at $1500 and your car amounts to $1500 after depreciation, there is no use of a collision coverage claim.
- If the damage is less than your deductible, you won’t file for a collision claim
- When you subtract the deductible from your car’s value, this is the maximum you can claim in damages for a collision. If your personal financial situation allows you to pay this amount, you can cut the coverage.
- Now take the amount above and minus the cost of collision coverage from it over the period of insurance. If the amount is negative, your collision insurance is costing you more than it’s worth. If the amount if positive, collision coverage will greatly benefit you.
Regardless, collision coverage has several benefits to its credit:
- It will help pay the funds in case of an emergency
- It gives the owner peace of mind knowing the repair costs are paid for in case the vehicle encounters an accident
- Saves the money you will have to pay out of your own pocket
Comprehensive Insurance
The second component of physical damage coverage includes all damages to your vehicle beyond a collision. It is, therefore, also known as ‘other than collision coverage’. If you lease a car, your lender will likely mandate that you have physical damage insurance. If you have your own car, you may or may not apply for comprehensive insurance. If you’re looking for auto insurance, it would help to consider comprehensive insurance and what all it entails.
What Does Comprehensive Insurance Cover?
It generally covers a broad range of incidents, excluding collision accidents. These include:
- Vandalism
- Theft of vehicle
- Fire
- Destruction from natural disasters
- Destruction from animals
- Destruction from falling objects
- Civil disturbance as a result of riots or protests
Comprehensive Insurance does not cover:
- Any collision related accidents
Do I Need Comprehensive Insurance?
There is a wide range of incidents that this aspect of physical damage insurance covers, which is why it is strongly advised when you are purchasing auto insurance. The main reason why comprehensive insurance is so important is that it helps save you from costs out of your own pocket if the accident is caused by a third person, object, or animal.
How to Set a Deductible?
When you opt for physical damage coverage, you will choose a deductible. If your car gets damaged in a hailstorm and incurs a cost of $1000, your insurer will pay for the amount left after your set deductible is subtracted from the total cost of repair.
Comprehensive coverage has a limit to the total amount your insurer will pay towards a covered claim. This limit is determined by the actual value of your vehicle. In case of theft, your insurer will pay for the depreciated value of your car minus the deductible.
As a general rule, a higher comprehensive deductible means lower the premium, which will save money, but take out more out of your pocket. Fastline Insurance will help you decide the comprehensive deductible amount suitable for your needs.