Accidents happen every day. The best way to prepare for an accident is by having insurance. But what coverage do you need to purchase to ensure your vehicle is covered?
What is Physical Damage Insurance?
Physical Damage insurance is coverage for your truck and it is usually packaged to include Comprehensive and Collison insurance. While Physical Damage coverage is not a federally required insurance coverage for Truckers, if you have a lien on your truck, the lien holder might request you to obtain this coverage. However, anyone is able to purchase this coverage for their truck.
What is covered?
Generally, there are two main components of a Physical Damage policy: Comprehensive and Collision coverage. While some policies have the option to purchase separately, most carriers include the coverage as one package policy.
So, what the difference between the two and what protection to they provide?
- Comprehensive is coverage for damages that occurs outside of a collision accident.
- Examples of Comprehensive damages
- Natural occurrences: like hail, windstorm, earthquake, flood
- Collision is coverage for damages to your unit caused by collision with another object.
How is Physical Damage Premium determined?
Several different factors come into play when determining the premium for a Physical Damage policy. In addition to the standard factors, like individual driving and accident history, there are two main premium factors insurance carriers consider.
The state, or in some cases zip code, the policy is written can be a determining factor in how the premium is calculated. For example, California is considered a high-risk state, meaning that there is a higher risk of an accident to occur. With insurance companies having to pay out more in claims within these areas, policies tend to have a higher rated premium. This ensures the carrier will have adequate funding to pay the claims.
Value of Unit:
Physical Damage premium are also determined by the total value of all units listed on the policy. Policies can be written on an Actual Cash Value, or ACV, basis or by Stated Amount provided by insured. (However, even though your policy may be written on a Stated Value basis, the insurance company will almost always pay based on the Actual Cash Value of your equipment.) So, generally, the higher the value will result in a higher premium.
Please note that the coverages and explanations of coverages listed here can differ with every Physical Damage policy depending on policy purchased and insurance company requirements. Please discuss what is included and what can be added on, or endorsed, to your policy or quote with your current agent.
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