Next to bodily injury, property damage insurance is perhaps the most common form of coverage, and is designed to protect any property you damage that does not belong to you. For example, if you pull out into a busy intersection without looking and broadside someone’s sedan, your property damage liability insurance will cover the dents and dings to that car.
Property damage insurance is not just available for auto insurance policies. It is also common for boat, RV, snowmobile, motorcycle and other vehicle insurance policies. You will also find property damage insurance on homeowner’s and business policies.
Property Damage Insurance Limits
Unfortunately, the concept of property damage insurance can be misleading. It sounds as though, when you purchase it, this coverage will pay for all damages to someone else’s property that the policyholder causes. In reality, however, the actual payout is subject to limitations.
When you purchase property damage insurance, you determine maximum coverage. For example, with an auto insurance policy, you might purchase property damage liability up to $15,000. In this case, your insurance company would cover any damage you caused up to that limit.
Your property damage insurance coverage is calculated per incident. For example, if you purchase liability insurance of up to $20,000, the insurance company would pay up to that limit for a single accident.
Determining Coverage
Keep in mind that property damage insurance does not cover every situation. For example, in many situations, you will never to purchase additional liability coverage for a trailer that you are pulling behind your vehicle. Or, in the case of homeowner’s insurance, the policy might not cover structures separate from the house, such as a storage shed.
This is why it is very important to read your property damage insurance policy carefully. Know exactly what it will cover and in which situations.
Keep in mind that property damage insurance on an automobile policy will cover not only damage to someone else’s vehicle, but to any property not owned by you. For example, if you run your car up a curb and crash into a business’s sign, your insurance policy will cover the cost of replacing it.
In some cases, property damage insurance comes with exclusions, which means that there are certain types of property not covered. An exclusion must be written into the policy agreement, and you should know of any exclusions in your coverage.