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Property Damage Liability Car Insurance

man after car accident on the side of the road

When you accidentally hit another car while driving, the thought “how am I going to pay for that?” crosses your mind at least once. It’s the law in most states that you have to provide payment for any vehicle damage or driver injuries you caused in an auto accident. Fortunately, there’s part of your car insurance policy that answers your question and satisfies the law -property damage liability. Nearly every driver in America is familiar with this major auto coverage. In fact, it’s often the first type of coverage new drivers purchase. Cars aren’t as destructive as locomotives when out of control, but they can still cause a lot of damage to everything around them. It wouldn’t just be to the car you ran into, but maybe a business or home and have to pay for those damages as well. Consider this your everything-guide to property damage liability for using it, shopping for it, and how much you will need.

What Does Property Damage Liability Provide Insurance For?

As previously mentioned, nearly every driver in America is familiar with property damage liability. This is mainly because that it’s largely required by law for all drivers to carry in some form. Provid\ing coverage for repairs for car accidents you cause is expected in nearly every state except New Hampshire. Coverage for your own repairs would be your responsibility if another driver didn’t damage them. Property damage liability operates on a per accident basis, meaning one claim is filed for every single accident. Bodily injury liability coverage functions the same way but only applies to people injured in an accident you caused.

Here is what property damage liability covers specifically:

  • Auto repair - Naturally, repairs to the other driver’s vehicle are covered first and foremost. Any replacement parts and labor fees from the repair shop are included as well.
  • Property damage - Collateral damage from the accident to buildings, fences, or street signs is paid for by the property damage policy.
  • Court fees - Attorney fees for legal defense in the courtroom for said property damages to the city or town are also covered by the property damage policy.
  • Lost business income - If a business was damaged from the accident and must close for repairs, your policy will cover any lost income during the closure.
  • Recurring expenses - Recurring repairs and long-term vehicle maintenance will continue to be covered by your property damage liability because of the accident.

Is Property Damage Liability Required For Every Car?

The majority of states will have a set limit or requirement for property damage liability insurance for their drivers. The only state where auto insurance isn’t required is New Hampshire. In a perfect world, every one in 49 states who owns a car carries liability insurance in the form of bodily injury liability and property damage liability. You can check your state’s limits at their Department of Motor Vehicles website. However, the average across the country is pretty constant. An easy way to remember them is the three-number code 100/300/50. Each refers to a certain value and coverage of a required liability policy. The “100” refers to a $100,000 minimum limit for bodily injury liability coverage per person. The “300” refers to a $300,000 bodily injury liability limit as well, but for a per accident use instead of per person. The “50” is now in property damage liability with a minimum limit of $50,000. These minimum limits aren’t a measure for exactly how much you will be paying, as every policyholder pays a different amount depending on personal circumstances.

What is Bodily Injury Liability Coverage?

As the name suggests, property damage insurance is only one of two required liability insurances you need to have while you are driving. While the property and vehicle damages are covered by a property damage liability policy, there’s the manner of covering injuries you cause to the driver of the other car and any passengers that were with them. Everything from medical fees to costs for ongoing treatment is covered on a per accident and per person basis. Similar to how property damage liability covers missed income for businesses closed because of an accident, bodily injury liability reimburses the injured driver or passenger for days missed at work due to their injuries. This type of coverage is also required in 49 out of 50 states. Having bodily injury and property liability coverage is known as “basic coverage.” Additional policies that would make up full coverage would be comprehensive and collision to cover your own car and yourself. When visiting an insurance company, ask about their basic and full coverage options.

How Much Property Damage Liability Would You Have To Get?

Every driver sets their insurance rates and limits differently. A liability insurance claim costs around a couple of thousand dollars when it is filed. The road most often traveled by is setting high coverage limits for maximum protection. The average claim has almost doubled from $2,880 to nearly $4,600. But because the coverage limits are high, so is the cost in general. It helps to consider what you personally can afford to purchase. Again, the state requirements and limits aren’t the averages -they are the bare minimum which may not fully cover you in the event of a major accident. Many policyholders look at their net worth to gauge how much they should be spending annually on liability coverage. When it comes to property damage liability, insurance companies recommend you go with the maximum amount of coverage that you can afford. You never know the severity of an auto accident waiting to happen.

How Much Does Property Damage Liability Cost?

Now to get to the point on what you will be regularly paying with property damage liability insurance. Keep in mind that an annual premium can be more costly if the driver was recently issued a speeding ticket or was involved in an accident. Remember that insurance companies base their premiums on driver risk based on their history.

Here’s what property damage liability rates will typically look like based on coverage limits:

  • Clean driving record - Drivers with no recent accident or traffic violation will see the lowest insurance rates. Some examples would be $88 for a $25,000 limit, $114 for a $50,000 limit, and $141 for a $100,000 limit. These are estimates.
  • Speeding ticket - Interestingly enough, annual premiums for speeding tickets are greater than those for a recent accident. These rates would look like $188 for a $25,000 limit, $231 for a $50,000 limit, and $273 for a $100,000 limit.
  • Recent accident - Annual rates for recent accidents or collisions run less than recent speeding ticket rates would. They would be around $146 for a $25,000 limit, $182 for a $50,000 limit, and $210 for a $100,000 limit.

How Do You File a Property Damage Insurance Claim?

The driver at fault for the accident files the insurance claim with the other’s policy. These claims are third-party in nature and are only made between the driver and the insurance company of the other driver. Now, it’s all a matter of following the necessary steps made, so the property damage and bodily injury are resolved in the quickest way possible.

Here’s how to file an insurance claim when it comes to property damage and bodily injury:

  • File police report - Insurance companies don’t require police reports of the accident. However, you would still be able to file one when you are in an accident. It’s the foremost form of documentation of the event. Your information and the other driver’s will be included along with accident details.
  • Document damage with photos - Taking photographs of the accident scene and damages is another safe way to document it. You should photograph every damage at least once.
  • Report the accident to the insurance company - Now comes the time to file the claim with the other driver’s insurance provider. You will need the following information for a file to come through, such as accident date, accident description, driver’s license number, birthday, and vehicle information such as make and model. You will only need the personal identification and vehicle information from the other driver.
  • Speak with claims adjuster - After the claim is filed, an insurance claims adjuster will review the damages and help facilitate the payout your policy provides. If you have full coverage, the adjuster will also officiate repairs and payment for your injuries and damage in the accident.

What is an Umbrella Insurance Policy? Does it Cover Property Damage?

After reading up until this point, you should have more than a deeper understanding of property damage insurance beyond just what it covers. You’re well aware of the legal requirements, why they are in place, how much to spend on it, and how to shop around for the best policy with the most value. But what if you need a property damage policy with higher limits than what the insurance company offers? For those looking for higher property damage limits, there’s what is known as an umbrella insurance policy—thinking of it as an add-on excess liability coverage for your existing insurance policies like auto or home. Hence, its alternate name -an excess policy. In simpler terms, an umbrella policy is used to provide further coverage to injury, property damage, legal fees, and anything that you would be liable or at fault for. When purchasing your property damage coverage, ask the insurance agent for more budgeted full coverage options. Basic coverage is only the first step for many policyholders.