Glossary
Property damage liability, defined
The part of an auto policy that pays to repair or replace what the policyholder's vehicle hits: another car, a fence, a light pole, a storefront, or the cargo in a truck. It also covers loss of use of the other party's car while it is being fixed and, if the matter goes to court, the legal defence.
In practice
The limit is a single figure per crash, and it is easy to underbuy. A late-model pickup or SUV can cost more than a low limit to replace, a multi-car pileup adds up quickly, and hitting a commercial building or a utility structure can run higher still. The same argument as for injury limits applies: raising it costs comparatively little. The coverage never pays for the policyholder's own car; that is collision. Business owners who let employees drive personal cars for work should know that the employer can be sued over the employee's crash, which is why hired and non-owned auto coverage exists on commercial policies.
A worked example
Suppose a driver with a $25,000 limit rear-ends a new SUV worth $55,000, which is totaled. The carrier pays $25,000; the other driver's carrier pays the rest under collision and then pursues the at-fault driver personally for $30,000. With a $100,000 limit the whole loss would have been covered. Hypothetical figures.
Applies to: Auto InsuranceCommercial Auto Insurance