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🚗 '''Physical damage''' in insurance parlance refers to [[Definition:Insurance coverage | coverage]] that protects against loss or damage to the [[Definition:Insured | insured's]] own tangible property — most commonly a vehicle — as distinguished from [[Definition:Liability insurance | liability coverages]] that respond to harm caused to third parties. Within [[Definition:Auto insurance | auto insurance]], physical damage is the umbrella term encompassing both [[Definition:Collision coverage | collision]] and [[Definition:Comprehensive coverage | comprehensive (other-than-collision)]] coverages. The term also appears in [[Definition:Commercial auto insurance | commercial auto]], [[Definition:Inland marine insurance | inland marine]], and equipment lines, wherever the policy addresses direct loss to the insured's own property.

🔧 Collision coverage pays for damage to the insured vehicle resulting from contact with another object or vehicle, regardless of fault. Comprehensive coverage handles non-collision perils — theft, vandalism, hail, flood, animal strikes, and falling objects. Both are subject to a [[Definition:Deductible | deductible]] chosen by the [[Definition:Policyholder | policyholder]], and [[Definition:Insurance premium | premiums]] reflect factors such as the vehicle's value, age, safety ratings, repair costs, and the insured's driving record. When a [[Definition:Total loss | total loss]] is declared — meaning repair costs exceed a specified percentage of the vehicle's [[Definition:Actual cash value (ACV) | actual cash value]] — the [[Definition:Insurance carrier | carrier]] settles based on the vehicle's pre-loss market value minus the deductible. [[Definition:Subrogation | Subrogation]] rights allow the insurer to recover physical damage payments from a negligent third party's [[Definition:Liability insurance | liability coverage]].

📉 Physical damage trends carry significant weight in carrier financial results because the frequency and severity of auto physical damage claims have surged in recent years, driven by higher vehicle prices, supply-chain-driven parts shortages, and the growing complexity of repairing technology-laden cars. [[Definition:Advanced driver-assistance systems (ADAS) | ADAS]] sensors and cameras embedded in bumpers and windshields have dramatically increased repair costs, pushing [[Definition:Loss ratio (L/R) | loss ratios]] higher and forcing [[Definition:Actuarial science | actuaries]] to revisit [[Definition:Rate filing | rate filings]]. For fleet operators and [[Definition:Commercial auto insurance | commercial auto]] underwriters, controlling physical damage costs through [[Definition:Telematics | telematics]]-based driver coaching and proactive [[Definition:Loss prevention | loss prevention]] programs has become a strategic priority.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Collision coverage]]
* [[Definition:Comprehensive coverage]]
* [[Definition:Actual cash value (ACV)]]
* [[Definition:Total loss]]
* [[Definition:Subrogation]]
* [[Definition:Commercial auto insurance]]
{{Div col end}}

Definition:Physical damage - Revision history

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