What is a Property damage liability insurance and how does it work?

Property damage liability insurance is a type of financial protection offered by an insurance company for accidental damage of other’s property while you are driving a car and unintentionally hit another vehicle or damage any external public or private property.

In this situation, you would be held responsible for the accident and the damage caused. The cost of overall damage would be recovered from your pocket. In case of massive accidents these costs could be extensively high and you might have to pay the bills completely from your lifetime savings or opt a personal loan to settle the claim amount. However, if you hold a Property damage liability insurance, most of your problems would be shorted out immediately and you would not encounter  more financial burdens after an accident for which you were held accountable.

Broadly, a Property damage liability insurance  covers the cost of all the physical properties damaged at the accident site. This includes, any other vehicle damage, multiple vehicles damage, other external property damage and many more, however let me make it clear that this wouldn't cover the cost of damage to your own vehicle. You may separately have an auto insurance to protect the cost of damage to your car.

In most states, holding a Property damage liability insurance is a legal obligation and every individual should hold at least a minimum limit of Property damage liability cover as declared by the government.

Who should purchase the Property damage liability coverage?

Any one who is driving an automobile should have the Property Damage Liability Cover. In most states,  holding a Property Damage coverage is a legal mandate and if the driver is found without having a valid property damage liability cover, the law may enforce to levy a penalty on the  person. If Property damage liability coverage is not available even after multiple notices, it may also lead to imprisonment.

So, holding a Property damage liability coverage is critically important for anyone who drives a vehicle.

Also if your Property damage liability coverage is about to get expired or is already expired, don’t delay to either renew the existing policy or purchase a new policy from a different company which can offer  you  the same plan at a better price.

What are the benefits of holding a Property damage liability coverage?

First and foremost it provides and financial protection to other’s property on the event of an accident  due to your mistake. In addition to this there are several other advantages of holding a property damage liability cover. know 10 best benefits of holding a Property damage liability coverage?

What are different types of Property damage liability coverage?

A property damage liability coverage are of many types based on different parameters and it depends on the individual to figure out which one best suits to his or her requirements:

Based on Term of Policy:

There are three types of Property damage liability coverage based on the term of policy viz. Short Term, Medium Term and Long Term policies. A short term insurance could be purchased for those vehicles which are either on rent or aged enough to get decommissioned shortly.  However, a medium and long term policies could be bought  for a personal or commercial vehicle that provides a longer protection plans (usually greater than 10 -15 years)

Based on Pricing:

Again, there could be three types of Property damage liability coverage  based on pricing – Low, Medium and High.

A low pricing insurance typically covers only the minimum legal limit as directed by the state laws. However a medium and High pricing covers can add more value to the existing limit and there provides a higher level of protection in case of sever accidents.

How the Property damage liability coverage works?

Generally the Property damage liability coverage comes handy as part of the a liability auto insurance coverage which typically consists of two main components :

1.Property damage liability coverage and

2.Bodily injury liability insurance cover

Your insurance provider may issue either a combined single limit policy or a split limit policy for your liability auto insurance cover.

What is a single limit liability policy ?

In this type of policy only a single limit is offered by your insurance provider and it completely depends on you to decide how you want to divide it against property damage liability and bodily injury liability limits . Assume, you are given a limit of $25000, now you can divide it based on your choice  into property damage liability as $15000 and bodily injury liability limit as $ 10,000.

What is a split limit liability policy?

In this type of liability insurance policy the insurance provider decides and splits the limit amounts against bodily injury liability and property damage liability.  Usually these limits are offered as part of different packages available with the insurance companies. Let’s assume the below package is offered- 65000/35000/40000 OR 65/35/40.

Here the first two components reflects (65000/35000) the limits for bodily injury liability  cover, however the third component (40000) is for property damage liability per accident. To know more about bodily injury liability cover please click here.

You may face below 2 situations while processing the Property Damage Liability Insurance-

1.The claim amount is less than the limit amount: Assume, in the accident the overall liability of the damaged property is $ 25000. However, your have an active Property Damage Liability cover of $ 40,000. You can claim the while amount and you need not to pay anything from your pocket.

2.The claim amount is greater than the limit amount: Assume, in the accident the overall liability of damaged property is $ 50,000. The insurance, company would settle only the amount to the extent of available limit (i.e. $ 40,000 only) and the outstanding $ 10,000 should be paid by you.

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