Physical Damage Insurance

Physical Damage Insurance: Everything You Need to Know

Physical damage insurance is an umbrella term used to describe a bundle of auto insurance policies that protect your vehicle. This insurance provides “full coverage,” which means that it provides both damage and liability coverage.


The general term includes collision insurance, comprehensive insurance you choose, and a bit more limited combined additional coverage insurance. Here’s who needs physical damage insurance and what you need to know before purchasing.

A red car heavily damaged by a fallen tree.

What is Physical Damage Insurance? 

Physical damage means any damage to your vehicle, inside or out. Physical damage insurance is a type of insurance that protects you from several physical damage issues that may happen to your commercial vehicle or fleet. The most important part of the package would be collision insurance, which protects you from collision accidents on the road, regardless of whether the truck is running.

A comprehensive insurance package covers the vehicle from issues like theft, riots, vandalism, damage caused by animals, glass breakage, hail, windstorms, flood, explosions, and other unexpected incidents. Some insurance packages may also combine both the functions and give you a hybrid insurance package. Even though there are some restrictions, physical damage insurance is a great way to save money.

Commercial physical damage coverage is optional in case you have completely paid for your vehicle. However, if you lease a loan for your vehicle, your lender might require that you have physical damage coverage.

What is Covered Under Physical Damage Coverage?

 Physical damage coverage consists of three main types of coverage:

  • Collision insurance
  • Comprehensive insurance
  • Fire and theft with Combined Additional Coverage (CAC) insurance

Let’s take a look at the details of each policy to understand the complete coverage fully: 

Collision Physical Damage Insurance

Collision physical damage insurance protects your vehicle in the case of collisions. This type of coverage covers your vehicle if it gets damaged in an accident or collision, covering the repair or replacement costs, in case:

  • Your vehicle collides with another object
  • Your vehicle rolls or overturns over after the collision

Comprehensive Physical Damage Insurance

Comprehensive physical damage insurance is also known as Comp or Other Than Collison (OTC) policy. This type of policy fills in the gaps that collision insurance leaves behind. In other words, comprehensive insurance covers your vehicle if it gets damaged as a result of: 

  • Theft
  • Fire
  • Riots
  • Hail, windstorms, water, or flooding
  • Explosions including earthquakes
  • Vandalism
  • Damage caused by birds or any animals
  • Breakage of glass
  • Damage due to any missiles (military missiles excluded) or falling objects

Combined Additional Coverage with Fire and Theft

This type of policy is similar to comprehensive insurance policies, except that it is more limited. Combined additional coverage provides coverage only in situations where damage was not caused by collisions. It also doesn’t cover windshield claims. 

Here is an example that will explain the policies more. Let’s say your car gets stolen. Because this was an incident and not an accident, you will use comprehensive insurance or fire and theft with CAC. If you chose a $500 deductible, you would pay the first $500 out of pocket to replace your vehicle, and your policies will cover the rest, up to the stated amount you submitted.

Physical Damage Insurance FAQs

What are Exceptions and Restrictions to Physical Damage Insurance?

Like other insurance policies, physical damage coverage also comes with a few exceptions, including: 

  • Collision insurance must be purchased with either comprehensive insurance or CAC insurance.
  • Physical damage insurance does not apply to non-owned trailers. These include vehicles that are under the “trailer interchange agreement.”

What is the Average Cost of a Physical Damage Policy?

For physical damage insurance, you need to choose a deductible or the amount that you agree to pay when you have a claim. Choosing a higher deductible is an easy way to lower the cost of your insurance policy. 

The cost of a physical damage insurance policy also depends on the value of the equipment you own and the type of coverage you choose. Additionally, in the case of trucks, the following types of coverage can be endorsed for additional costs:

  • A combined deductible for your truck as well as your trailers
  • Any coverage for personal belongings
  • Coverage for electrical equipment
  • Chains, tarpaulin, and other “binder” coverage
  • Footing the expenses for a rental truck while the owned truck is unavailable
  • Increased towing limits

Accidents can be heavy on your savings and your finances. Therefore, unless you can afford to self-insure your vehicle, physical damage insurance & auto liability insurance (which may or may not include property damage liability) will help protect your vehicle in most circumstances. You can always ask for insurance quotes from the commercial insurance companies or representatives you come across, to test the waters. Also, make sure you always watch for the disclaimers in tiny letters. 

It’s safe to assume no individual wants their car to be damaged or face repairs. Therefore, when a car insurance policy provides full coverage in every possible situation, it is a good idea to use it. If you’re looking to protect your vehicle, physical damage coverage is for you.

Additionally, if you have a loan on your vehicle or have leased your vehicle, physical damage coverage is a wise choice as it can protect you from various expenses in the case of accidents. It is even compulsory to have physical damage insurance when you lease a vehicle or take a loan to purchase it. In the latter case, the company or bank that grants the lease or loan (the lender) is recorded as a “loss payee” in your account, meaning that in the case of the car being damaged beyond any repair, the company will pay the balance of the loan to help ease your financial burdens and expenses.

However, if your vehicle has been fully paid for, physical damage coverage is only optional. Despite this, it’s always great to have both collision and comprehensive coverage because it’s better safe than sorry.

Is Physical Damage Insurance the Same as Liability?

Auto liability insurance covers bodily injuries and property damages to a third party due to an accident while physical damage insurance covers the vehicles that got damaged in an accident. 

Is Physical Damage the Same as Bobtail Insurance?

Bobtail insurance covers any liability that comes as a result of an accident in which your truck had no cargo. On the other hand, a physical damage policy covers all damages that your vehicle encounters. 

Are you still unsure about physical damage insurance or need some help getting a quote for your business? Contact us today and get all the information you need fast and for free!

Ready to Start?

Get matched with a provider that fits your needs today.