How much property damage coverage should I have?

Question

If your car is totaled and you only have liability insurance, you will have to pay to replace the vehicle yourself or file a claim with the other driver’s insurance company. Liability coverage alone does not protect your car in any way, just injuries and damage you may cause to others. You need to have … read full answer collision, comprehensive, or new car replacement coverage if you want your insurance company to pay to replace a totaled car. However, if your vehicle is damaged or totaled in an accident that isn’t your fault, you should make a claim on the at-fault party’s property damage liability policy to get your car repaired or replaced.

Only Having Liability Insurance Will Not Cover:

Damage to your vehicle from an accident.

Damage to your vehicle from fire, hail, flooding, fallen trees/limbs, or animal strikes.

Injuries you or your passengers incur.

Theft or vandalism of your vehicle.

On the other hand, collision coverage would help if you cause a run-in with another vehicle or object that totals your car. Comprehensive coverage would apply to damage caused by a fire, storm, or animal encounter, as well as if your car is stolen. Finally, new car replacement coverage would let you recover the full value of a newly purchased vehicle that gets totaled.

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Answer 1 · 2021-08-16 09:10:00

WalletHub, Financial Company

@WalletHub • 08/16/21 This answer was first published on 08/16/21. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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You should have as much property damage coverage as you can comfortably afford, ideally enough to cover your assets in case you are sued after an accident. At the very least, you need to have your state’s minimum required amount of property damage liability insurance if you cannot afford higher limits.

State minimum requirements tend to be pretty low for property damage liability coverage since the average claim for property damage is only around $4,000. However, you should always consider the worst-case scenario when determining insurance limits.

For example, a new car costs an average of $36,000. If you total someone’s new car and you’re only carrying $4,000 in property damage coverage, you will be responsible for the remaining $32,000. That driver can also sue you for that amount. Because of this, you should always carry enough liability insurance, both property damage and bodily injury, to cover your assets and prevent financial ruin if a serious accident occurs.

So, if your net worth is $100,000, it’s recommended that you purchase $100,000 in property damage liability coverage. If your net worth is higher than the limits available to you, you can supplement your liability insurance with an umbrella policy.

To learn more, check out WalletHub’s guide to property damage liability insurance.

Answer 2

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