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🚘 '''Physical damage coverage''' is the portion of an [[Definition:Auto insurance | auto insurance]] policy that pays to repair or replace the insured's own vehicle when it is damaged or destroyed, as opposed to [[Definition:Liability coverage | liability coverage]], which addresses harm the insured causes to others. It comprises two sub-coverages: [[Definition:Collision coverage | collision]], which responds when the vehicle strikes another object or overturns, and [[Definition:Comprehensive coverage | comprehensive]] (sometimes called "other than collision"), which covers non-collision perils such as theft, vandalism, hail, fire, and animal strikes. In [[Definition:Commercial auto insurance | commercial auto]] policies, physical damage coverage uses the same conceptual framework but is tailored to fleets, scheduled vehicles, and business-use risk profiles.

🔧 Each sub-coverage carries its own [[Definition:Deductible | deductible]], which the [[Definition:Policyholder | policyholder]] selects at the time of purchase — common options range from $250 to $1,000 or more. When a [[Definition:Covered loss | covered event]] occurs, a [[Definition:Claims adjuster | claims adjuster]] or an [[Definition:Appraisal | appraiser]] inspects the vehicle and estimates repair costs. If those costs exceed the vehicle's [[Definition:Actual cash value (ACV) | actual cash value]], the insurer declares a [[Definition:Total loss | total loss]] and pays the ACV minus the deductible. Increasingly, carriers leverage photo-based estimating tools and AI-driven damage assessment to accelerate the process, reducing [[Definition:Cycle time | cycle time]] and improving the customer experience.

📊 Physical damage coverage is a major driver of [[Definition:Loss ratio (L/R) | loss ratio]] performance in [[Definition:Personal lines | personal]] and [[Definition:Commercial lines | commercial]] auto books. Rising repair costs — fueled by advanced vehicle technology, sensor-laden bumpers, and supply-chain disruptions for parts — have pushed [[Definition:Severity | severity]] trends sharply upward, forcing [[Definition:Underwriting | underwriters]] to recalibrate [[Definition:Premium | premiums]] and deductible structures. [[Definition:Insurtech | Insurtechs]] have entered the space with parametric-style offerings and expedited digital claims workflows, while traditional carriers invest in preferred repair networks and [[Definition:Telematics | telematics]] data to better predict and price physical damage risk. For any carrier writing auto business, managing this coverage efficiently is fundamental to remaining competitive and profitable.

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

Definition:Physical damage coverage - Revision history

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