What Is Combined Physical Damage Coverage?

Combined physical damage coverage is a type of comprehensive auto insurance policy that reimburses policyholders for repairs of all types of physical damage to a vehicle. It does not cover costs related to personal injury.

Comprehensive physical damage coverage would protect a policyholder for a range of mishaps that can occur to a vehicle including theft, fire, flood, vandalism, window breakage, collisions with animals, and weather-related damage as well as accidents.

The premium for a combined physical damage coverage policy generally ranges from $1,000 to $3,000 per year depending on the vehicle and its owner's accident record.

Understanding Combined Physical Damage Coverage

Collision insurance is the most common and typically the most expensive type of coverage needed for a vehicle. The insurance company undertakes to repair or replace a vehicle that is damaged in a collision. The consumer may agree to pay a higher deductible in order to lower the monthly premium cost.

A combined physical damage coverage policy extends the insurance to include reimbursement for costs related to other destructive events such as fire and theft. 

Key Takeaways

  • Combined physical damage coverage insures against losses caused by a variety of events in addition to a collision.
  • Vehicle loans and leases typically require that the driver purchase combined physical damage coverage.
  • Businesses may opt for multiple policies to cover a variety of specific hazards they face.

Lenders, lessors, and lienholders often require combined physical damage coverage for financed and leased cars in order to protect their own interests in the event of damage or loss. Non-compliance could result in a termination of the lease or loan agreement.

State Insurance Laws

Each state has its own minimum insurance coverage laws for drivers. Some require that a vehicle owner obtain combined physical damage coverage. 

Some states require coverage adding up to $100,000, broken down into minimums for each type of coverage. For example, it may require 25/50/25 coverage. That is $25,000 for bodily injury per person, $50,000 for bodily injury in an accident, and $25,000 for physical damage in an accident.

The minimum limit requirements for lender-required coverage often exceed the minimums set by states.

Business Combined Physical Damage Coverage

Drivers and business owners operating one or more vehicles for commercial purposes may buy combined physical damage coverage.

This type of policy requires the insured to pay a deductible before the insurer pays the claim. A lower deductible means a higher premium payment. The policyholder must weigh the advantage of low out-of-pocket expenses against high premium payments.

A higher deductible means a lower premium in combined physical damage coverage, as in collision coverage.

Given the many potential perils of doing business, some business owners purchase a variety of policies to cover a multitude of risks rather than a single policy. A business owner may purchase specific liability insurance policies to protect against losses due to workers' compensation claims, fines for acts of negligence, and fines for pollution.

Buying several policies allows the business to better match coverage limits with the estimated frequency and severity of losses of a particular nature.