When Do I Need Physical Damage Coverage for My Car?

Physical damage coverage is a category of auto insurance that covers damage to your vehicle from car accidents and other sudden, unexpected causes. It is not required by law, but you may need physical damage coverage if you are financing or leasing your car.

Keep reading for more information about what physical damage insurance covers and whether it’s necessary for your vehicle.

On This Page

• 

  What Types of Physical Damage Coverage Are There?

• 

  How Does Physical Damage Insurance Work?

• 

  What Does Physical Damage Insurance Cover?

• 

  Do I Need Physical Damage Insurance?

• 

  How Much Does Physical Damage Insurance Cost?

• 

  How To File a Physical Damage Claim

• 

  FAQs

What Types of Physical Damage Coverage Are There?

There are two main types of physical damage coverage you can purchase to protect your vehicle: collision coverage and comprehensive coverage.

Collision

Collision insurance can pay for repairs to your vehicle after a car accident regardless of who was at fault. It is the only type of auto insurance that covers your car repairs after a collision you were responsible for. For example, it could help you pay to fix your front bumper after you miss a stop sign and crash into another car.

You could also file a claim on your collision insurance after an accident caused by another driver.

However, this could cause your rates to go up unless you live in California or Oklahoma, where it is illegal for insurance companies to raise your rates after an accident you weren’t responsible for.^[1][2] As a result, it may be better to file a claim on the other person’s liability insurance if they were the at-fault driver.

Comprehensive

Comprehensive insurance covers sudden and unexpected damage to your vehicle from a source outside of your control. Sometimes known as “other than collision” coverage, it accounts for most forms of non-collision damage to your car. These can range from natural disasters like wildfires and hailstorms to human actions like theft and vandalism.

A subset of comprehensive coverage known as fire and theft with combined additional coverage (CAC) is reserved for large commercial trucks and only covers damage from perils specifically named in the policy.^[3]

How Does Physical Damage Insurance Work?

You must regularly pay your premiums to maintain your comprehensive and collision coverage. Whenever you get into an accident, you will have to pay your deductible before your insurer will chip in. For example, if you have a $500 deductible and you cause $2,000 worth of damage to your car in an accident, then your insurance company would contribute $1,500 for your repairs.

In the event of a total loss, most policies would reimburse you at your car’s actual cash value (ACV), which is the value of your car when taking depreciation factors like age or wear and tear into account. However, you could receive enough money to buy a new vehicle after a total loss if you purchase an optional car insurance add-on called new car replacement insurance.

What Does Physical Damage Insurance Cover?

Physical damage insurance covers a wide range of collision and non-collision damages. Below are some examples of situations that would be covered by your collision insurance:

• Collision with another vehicle: You fail to check your mirrors and crash into another car while trying to switch lanes on the highway.
• Collision with an object: You doze off at the wheel and crash into a tree.
• Single-car rollover: You spin out after driving too fast on an icy road and flip your car over while trying to regain control of the vehicle.

Meanwhile, the following perils would be covered by your comprehensive insurance:

• Fire: Your propane grill explodes in your garage and sets your car on fire.
• Hailstorm: A chunk of hail creates a large dent in the roof of your car.
• Windstorm: A tornado blows a tree branch through your windshield.
• Theft: An intruder damages your car’s electrical system while attempting to hotwire it.
• Vandalism: Your ex keys the side of your car and punctures your tires after your breakup.
• Civil disturbance: Your car gets flipped over by a group of rioters.
• Falling objects: A meteor falls on your car and destroys your engine.
• Collision with an animal: Your front bumper and headlights are damaged after a deer runs into your vehicle.

What Isn’t Covered?

Physical damage coverage typically won’t pay for anything that is already covered by another insurance type or that isn’t covered by car insurance in general. Below are some circumstances that aren’t covered by physical damage auto insurance and whether they are covered by another type of insurance.

Do I Need Physical Damage Insurance?

Physical damage insurance is not required by law in any state, although your lender may require you to purchase collision and comprehensive coverage before approving you for a car loan. However, if you have finished paying off your car or can afford to pay for your car upfront, you are not obligated to buy physical damage coverage.

Nevertheless, physical damage coverage is generally a wise investment since it steps in when there isn’t another at-fault driver whose insurance can cover your repair bills.

But, as your car gets older and loses value, physical damage insurance may eventually cease to be economical. It will likely be worth dropping collision and comprehensive coverage once their premiums cost more than 10 times the value of your car.^[4]

How Much Does Physical Damage Insurance Cost?

The average American in 2020 paid $370.73 a year for collision coverage and $174.26 a year for comprehensive coverage. Meanwhile, the average annual cost for a full coverage policy with both physical damage insurance and liability insurance was $1,176.18.^[5]

Your premium can vary depending on factors like the age and model of your car, your driving record and claims history, where you live and, in some cases, your credit score. Be sure to compare rates using an insurance marketplace like SmartFinancial to find the best physical damage coverage for your circumstances and budget.

How To File a Physical Damage Claim

If your car is damaged by an accident or unexpected peril, you can take the following steps to file a car insurance claim through your physical damage coverage:

1. Call 911 to report any injuries and have an officer write up a police report.
2. Take photos of the damage and any other relevant features of the accident scene.
3. Contact your insurance provider and submit relevant photos and documents.
4. Check your deductible and use Kelley Blue Book to estimate your car’s ACV so you can get an idea of how much money you can expect from your insurance company.
5. Get an estimate from a repair shop.
6. Accept your insurance payout and get your car fixed.