Auto Insurance Physical Damage Coverage

| January 25, 2011

The property section of an automobile policy is called the physical damage section. This is the part of the policy that covers you, the car owner in the event of a loss. Automobile physical damage coverage comes in two flavors; comprehensive and collision.

Automobile Collision Coverage

A collision loss occurs when your vehicle collides hits another object. The other object can be another car, a deer or an inanimate object like a mailbox or wall (heaven forbid). You don’t actually have to be the one that runs into another object. The other object can run into your car. No matter what the cause, if the two objects collide, it falls under the collision section of the policy.

Auto Comprehensive Coverage

Comprehensive coverage reimburses you for everything else that can happen to your car that doesn’t fall under the collision section. If your car is stolen, set on fire or vandalized, that damage is covered under the comprehensive section of the policy.

Physical Damage Deductibles

Unlike the liability section of an auto policy, the physical damage section has deductibles. The deductible were put in place to deter policy holders from filing small frivolous claims. Claims such as damage to a lug nut or a broken windshield wiper blade are considered nuisances and fall below the deductible.

When thinking about auto deductibles think about the big picture. Insurance is supposed to be your security blanket that reimburses you in the event of a large, hard to pay out of pocket loss, not for small nickel and dime claims.

Choosing the Right Physical Damage Limit and Deductible

Choosing the right deductible and physical damage limit can be tricky. It’s not so hard if you’re buying and financing a brand new car. The finance company/lending institution usually outlines the physical damage insurance requirement in the contract. They tell you how much insurance you must carry and how large a deductible they’ll accept.

It becomes a little tricky when you buy a used car. With a used car you need to do a little more homework. First determine if it’s even worth purchasing physical damage coverage. If the car is over 10 years old, it may not be worth it.Auto Accident

Next, look at your finances. How much out of pocket expense can you afford to pay for each and every physical damage claim? If a $1,000 deductible is more than you can afford, then lower your deductible or, open a savings or interest bearing account in which you save $1,000 so if a claim occurs you can pay the deductible amount.

The higher the deductible the more you save in insurance premiums, but the savings isn’t worth it if you cannot afford to pay the deductible at the time of loss.

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Category: Car, Insurance

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Felicia A. Williams is a wife, mother, freelance writer and owner of Tidbits and Stuff.

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