What Does Property Damage Liability Cover?
Understand auto property damage liability insurance. Learn what it covers, its limits, and how it protects you financially when you're at fault for damaging others' property.
Property Damage Liability (PDL) insurance is a fundamental part of an auto insurance policy. It covers damage you cause to another person’s property in an accident where you are at fault. This coverage protects the policyholder from the financial burden of repairing or replacing another person’s damaged assets.
Scope of Property Damage Liability
Property Damage Liability insurance covers financial obligations when the policyholder, or someone driving their insured vehicle with permission, causes damage to another person’s property. This coverage activates when the policyholder is found legally responsible. Its aim is to compensate the affected party for their losses, ensuring their property can be repaired or replaced.
This coverage extends to various property types damaged in an accident. Examples include other vehicles, stationary objects like fences, mailboxes, and utility poles, and structures such as buildings, signs, and landscaping. It also covers public property like guardrails and streetlights. PDL exclusively covers property belonging to others, not the policyholder’s own vehicle or personal belongings.
Common Exclusions from Coverage
While Property Damage Liability provides financial protection, it does not cover all types of damages. For instance, damage to your own vehicle is not covered by PDL; this falls under collision coverage. Injuries sustained by yourself or other individuals are also not covered by PDL, as bodily injury liability or medical payments/personal injury protection (PIP) are designed for such expenses.
Intentional damage caused by the policyholder is excluded from coverage, as policies do not cover deliberate acts. If you are involved in an accident with an uninsured or underinsured motorist, your PDL coverage will not pay for your damages; specific uninsured/underinsured motorist property damage coverage is necessary. Property you own or are transporting at the time of the accident is also excluded.
Understanding Coverage Limits
A Property Damage Liability coverage limit is the maximum amount your insurance company will pay for property damage from a single accident. These limits are expressed as either a single lump-sum amount, such as $25,000, or as part of a split limit. In a split limit (e.g., 25/50/25), the final number represents the maximum for property damage liability.
Should the damage cost exceed your coverage limit, you are personally responsible for the remaining balance. For example, if you have a $25,000 PDL limit and cause $35,000 in damages, you are liable for the additional $10,000. Unlike collision or comprehensive coverage for your own vehicle, Property Damage Liability generally does not involve a deductible when a claim is made against your policy for damage to others’ property.
Filing a Property Damage Liability Claim
When a Property Damage Liability claim is made against your auto insurance policy, the process begins with you, the at-fault driver, reporting the accident to your insurance company. Your insurance company then investigates the incident, assessing the extent of the damage caused to the other party’s property.
The insurance company then works directly with the damaged party to arrange repairs or financial compensation. This compensation is provided up to the maximum limit of your policy. The objective of this claims process is to restore the damaged party to their pre-accident financial position regarding their property losses.