Properly Covering for Property Damage

by | Apr 30, 2021 | Auto Insurance, Claims, Personal Insurance, personal property, Personal Risk, Property Values

Keeping Up with Rising Costs

When was the last time you went shopping for a car? The trends for car prices are obvious: up, up, and away they go. Vehicle prices are not the only things skyrocketing. The cost of construction, goods and services, etc. are all steadily increasing year after year. You may be asking yourself how these rising prices relate to auto insurance, and the answer is surprisingly simple: your Property Damage coverage.

What Does Property Damage Coverage

The most overlooked line of an automobile policy is Property Damage coverage, which covers any other property that a driver may hit. This includes vehicles, buildings, telephone poles, landscaping, the list goes on and on. If it isn’t living and you can hit it with your car, then chances are this is the coverage that is going to pay for it.

Here’s an example of a Property Damage claim. Ms. Jones is driving her vehicle to work one morning, and traffic suddenly stops. She hits Mr. Smith’s car in front of her pretty hard. His car is nothing fancy, something common and conservatively priced, like a 2017 Toyota RAV4, worth between $17,000-20,000 in today’s market. From the force of the collision, Mr. Smith then hits a telephone pole on the side of the road with a transformer at the top. Because Ms. Jones caused the collision, she is responsible for both Mr. Smith’s vehicle and the damage to the telephone pole. The final bill? In the ballpark of $230,000.

Another common example of an expensive Property Damage claim is the multiple vehicle pileup. Multiple vehicle collisions often result in six-figure Property Damage payouts because the person who caused the accident is responsible for all of the ensuing damage. So, if Ms. Jones rear ended Mr. Smith, which caused Mr. Smith to rear end Mrs. Johnson in front of him, then Ms. Jones is responsible for the damage to both Mr. Smith’s and Mrs. Johnson’s vehicles.

Costs of Being Under-Insured

Unfortunately, the scenarios above are not uncommon. Many people underestimate the cost of hitting a vehicle, and most don’t realize that if they damage a telephone pole, guardrail, or tear up someone’s lawn that they are responsible for the cost to repair or replace those too. Many brand new mid-level vehicles start at $34,000 or more, and some trim levels can push that cost far higher. The cost of hitting public property like guardrails, jersey barriers, or the aforementioned telephone pole, not to mention replacing broken fences and landscaping can cost as much or more than some cars to be repaired or replaced.

Most people carry roughly $100,000 worth of Property Damage coverage on their policy, which is simply too low in the expensive world that we live in. In the past, it was considered a reasonable amount, so people who have not reviewed their policies could be in for a big surprise. Additionally, increasing your limits doesn’t have to be painful on your wallet: to go up a tier from $100,000 to the next option of $250,000 can cost as little as $10 more per year.

The Bottom Line

The bottom line is that the cost to fix what was damaged in an accident can quickly add up to a much larger figure than many would think. Property Damage coverage is a great value considering the cost of property repair compared to the affordability of Property Damage coverage. Furthermore, consequences for not having adequate coverage can include lawsuits that could jeopardize personal assets or having wages garnished until the cost to repair the property is repaid. Reviewing this line of coverage on your policy only takes a moment, and the price to increase is typically nominal, but you will be far better protected. Unsure about your coverage? Reach out to our team and we can review your policy before your caught under-insured.


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