What Does Property Damage Cover on an Auto Policy?

Cynthia Closkey Personal

When you auto policy renewal in the mail, I’m sure you look at it and think to yourself, “What am I even paying for?” One coverage you’ll see is called Property Damage. Why do you need property damage on your auto policy?

Property Damage coverage on an auto policy is coverage for someone else’s property that you may damage in an accident. Imagine that you’re traveling on a snow covered road and as you round a bend in the road your car begins to slide, you hit someone’s mailbox and then spin across the road taking out a fence that runs along a homeowner’s yard. Let’s take a look at what you have damaged. We know the first home owner’s mailbox will need to be replaced and more than likely their yard is tore up as well. Across the road you took out a wooden fence that lined the second home owner’s yard. So now you will also have the costs for the fencing, smoothing out the ruts in the yard and contractor fees. Now take a look at what property damage limit you purchased. If you purchased the minimum required by the state, $5,000, you will exceed that limit rather quickly. If the mailbox had been the only damage you caused, you would be covered with the $5,000 (remember you are replacing a mailbox and repairing the yard.) But you’re probably also going to be buying the fencing, paying a contractor. After reading this scenario you may want to increase the coverage that you have! Too low of property damage limits may cause a disgruntled party to sue for damages. The courts may even attach your wages until the situation is rectified and all parties are back to the state they were in before the accident occurred.

When quoting a new client, we look at their current coverages and then look at how we can better their policy. Remember, policy coverages are ultimately the decision of the insured. And now that you are better informed you can decide which coverages best serve you and your family’s insurance needs.