Property Damage Liability Auto Insurance Coverage

When operating a vehicle, you want to protect yourself and your property, but what about other’s property? If you are at-fault in an accident, you can be liable not only for any injuries you cause but also for any damage you cause. Property damage liability coverage is here to protect you financially in this scenario.

Every army veteran’s auto insurance contains property damage liability. The amount of coverage needed varies by state, but the coverage protects against the same thing no matter what — a third party bringing a claim against you.

Property damage liability coverage is designed to cover the damage you cause to another’s vehicle, home, or other personal property in the event of a claim. It is one of the required coverages in most states and with good reason as it protects other’s when you are operating a vehicle (Read more: Car Insurance Basics). Read on to learn more about the property damage liability definition.

What is property damage liability auto insurance?

Property damage (PD) liability insurance is liability auto insurance coverage that pays out if you damage a third party’s personal property. For example, if you get in accident with another car or hit a house, the insurance will pay out to cover that damage up to your coverage limit.

Each state has its own set of laws governing how much insurance you must carry, but on average, $25,000 is the minimum for property damage liability. This amount is subject to review by each state’s Commissioner of Insurance and is changed periodically to adjust for inflation and rising costs.

Even though each state has a different minimum, you can buy coverage up to $100,000 with most insurers. If you want even more protection, you can purchase an umbrella policy over this amount.

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How Property Damage Liability Auto Insurance Coverage Works

Who pays for property damage in a car accident? Your property damage liability coverage protects you in the event of a third party bringing a claim against you, whether a suit has been filed or note. If you get in a car accident and exchange insurance information, it is likely whomever you hit will be coming after your insurance to fix their vehicle. This is where property damage liability steps in.

When a claim happens or a lawsuit is filed against you for damaging someone’s property in your vehicle, you need to alert your insurance company who will send an adjuster out and help you settle the claim. They will pay up to the limit of your policy, over any auto insurance deductible, for property damage you caused.

In addition to the actual cost of repairs, legal fees and lost wages are frequently also covered under Property Damage Liability. The legal fees refer to lawyers utilized to protect you. The lost wages refer to a third party’s lost wages in the event that the damage you caused prevents them from going to work.

Remember that your own property is not covered here but rather in other places on your policy (Read More: Car Insurance Coverage).

Property Damage Liability Minimum Auto Insurance Requirements

Each state has a different required limit for property damage liability auto insurance. The states with the smallest minimum coverage are California, Massachusetts, and Pennsylvania, each requiring $5,000. Most other states require between $10,000 – $25,000 of coverage. These minimums should not dictate what you purchase as each circumstance is different

Even though a state says you are only required to carry a certain amount, you can still be financially liable for damage caused that is not covered by insurance, so buying a higher limit is a smart move to ensure you are financially secure.

If you think about causing an accident with a high-end vehicle, it becomes clear quickly why the state minimum might not be sufficient. Let’s say, for example, that you are in an at-fault accident with a brand new high-end sports car that retails for $100,000, but you only have $25,000 of coverage. If you totaled the sports car and are clearly at fault, you could find yourself liable for the full $100,000.

If you only have $25,000 of coverage, the owner of that sports car can come after you for the $75,000 that was not covered by insurance. You can see why the state minimum wouldn’t cover you, especially considering the average price of vehicles.

With this in mind, it makes sense to look to purchase higher property damage liability limits, especially if you live in a place with many high-end or new cars.

Property Damage Liability Auto Insurance Rates

The rate of your property damage liability coverage will first and foremost be dictated by your driving record. If you have many at-fault accidents on your record, a habit of speeding or reckless driving, or a DUI you are likely to pay a much higher rate as you have a raised chance of causing an accident.

Other factors that play into your rate are the same as most auto insurance: age, gender, where you live, how much you drive. All of these are considered when coming up with your rate as younger male drivers are more likely to cause accidents than older female drivers. People who live in high-end neighborhoods and high crime areas usually have higher auto rates. Of course, anyone who drives more than the national average also has a higher risk of getting in an accident.

The best way to get a competitive property damage liability quote is to shop around (Read more: How to Get Your Veterans Auto Insurance Quote and Policy). By comparing multiple companies, you can see who can offer you the most coverage for the best premium. Remember that buying less insurance does not make one company cheaper than another — make sure you are comparing the same coverage limits across quotes.

To compare quotes, it is best to work with your agent or representative to look through each coverage and make sure they are quoted apples-to-apples. If they are, you can then look to premium and company reviews to make sure you are getting the best deal with a reliable insurer.

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How much property damage car insurance do you need?

Since everyone’s circumstance is different, looking at your own financial situation is important when buying insurance. The best way to decide on the right amount of coverage is the value of your vehicle, any lost wages you might experience, the type of location you drive in, and your own habits.

Coverage on your own vehicle should be as simple as understanding its value and insuring it to that value. If you use your vehicle for work, you may want to consider how long you would be out and not being paid if your car was totaled and get lost wages coverage as well.

If you live in a high-end area with many new cars, a higher property damage liability limit is likely a good bet. The last thing you want to find is that you have to come out-of-pocket because you did not have enough insurance coverage after an accident. Your insurance agent can help provide you with an idea of what coverage is appropriate.

Once you have all your quotes lined up and have gone through them, the decision comes down to premium, deductible, and billing options. Lower premium, lower deductible and flexible billing are all important, especially if you are worried about your financial situation. A higher deductible may be appropriate if you have cash to cover the cost of a claim’s deductible and you want a lower premium.

Property Damage Liability Auto Insurance Coverage: Summing Up

Property damage insurance is an important auto insurance coverage that protects you against third party claims and lawsuits in the event of an at-fault accident. This coverage will cover your legal fees, the damage done to someone else’s property, and lost wages that may incur as a result of the damage.

Keep in mind the right amount of coverage is dictated by your financial situation, and higher coverage is almost always a safe bet. This will give you peace of mind and mitigate out-of-pocket expenses at the time of a claim. Many drivers opt for the maximum limit offered by their insurance company and even buy umbrella coverage over their limit. It is always better to have it and not need it than need it and not have it.

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