Combined Physical Damage Coverage

Combined physical damage coverage is auto insurance that provides coverage for damages caused by collisions and non-collision events. Combined physical damage coverage protects against physical damages to a vehicle, but does not cover personal injuries.

Insurance policies defend the insured against losses from specific risks over a fixed period. If a loss falls within the risks the policy covers, the insured may request payment for damages up to the policy limit. 

Combined physical damage coverage is a comprehensive insurance product that protects the policyholder from risks that could damage a vehicle, including damages resulting from vehicular accidents.  Comprehensive insurance provides coverage against damages caused by something other than a motor vehicle collision, such as theft, fire, vandalism, window breakage, collisions with animals, or weather-related damage. 

Collision insurance is the most common and often the most expensive physical damage auto coverage. It is designed to repair or replace a vehicle damaged in a collision. The combined physical damage coverage policy includes comprehensive coverage also called fire and theft insurance. 

Lenders, lessors, and lienholders often require combined physical damage coverage on financed and leased cars to protect their interest in the event of damage or loss.  For auto insurance, states have minimum coverage requirements for drivers to legally operate a vehicle, and combined physical damage coverage meet those requirements. The minimum limit requirements for lender-required coverage often exceeds the minimums set by each state. Non-compliance could result in a termination of the lease or loan agreement.

Individual drivers and businesses operating one or more vehicles for commercial purposes may buy combined physical damage coverage. This type of policy requires an insured to pay a deductible before the insurer pays the claim. Higher premiums are typical for low deductible policies. The policyholder must weigh the advantage of low out-of-pocket expenses against paying high premiums.

In some cases, the insured may purchase a variety of policies to cover a multitude of risks rather than a single policy that includes a broad array of risks. For example, a business may purchase several specific liability insurance policies to protect against different risk types, such as negligence coverage, pollution coverage, and workers’ compensation. Buying several specific policies allows the insured to better match coverage limits with the estimated frequency and severity of losses of a particular nature. The insured may realize savings when adding the premiums for individual policies together.

While purchasing several specialized policies may make sense for a business dealing with a wide range of risks, it may also be sensible to buy a comprehensive policy. Comprehensive policies combine the features of specialized policies into a single instrument.