Under the All Risks Physical Damage Part of our sample fault-based policy, the insurance company promises to pay for a loss to your car or a car you are driving. This section of the fault-based policy generally covers damage to the car caused by all risks, and in some cases reduces your deductible. Insurance companies offer this valuable coverage, but it is expensive and most people do not purchase it. There seems to be some overlap with collision and comprehensive coverage, but this has a much broader application. The policy agreement says:
We will pay for loss less any applicable deductibles to your insured car or non-owned car. The deductible amount applies to each separate loss occurring during the policy period, and losses resulting from mechanical breakdown, wear and tear, or other causes shall not be considered cumulatively in applying the deductible.
The deductible shall not apply to loss caused by a collision of a car owned by you and insured by us with:
(1) another car insured by us;
(2) an uninsured motor vehicle; or
(3) an insured car, and you are legally entitled to recover the amount of repairs from the owner or operator of such car and the amount of repairs to the car owned by you and insured by us exceeds the amount of the deductible.
Glass breakage without any other damage to the car shall reduce the deductible amount to $50.
Loss to audio equipment in your insured car without any other damage to the car shall reduce the deductible amount to $50.
We may pay the loss in money or repair or replace damaged or stolen property. We may, at any time before the loss is paid or the property is replaced, return, at our expense, any stolen property either to you or to the address shown in the Declarations, with payment for the resulting damage. We may keep all or part of the damaged property at the agreed or appraised value. If you retain the damaged property we may deduct its value following the loss from our payment to you.
Either you or we may demand appraisal of the loss. Each will appoint and pay a competent and disinterested appraiser and will equally share other appraisal expenses. The appraisers, or a judge of a court having jurisdiction, will select an additional appraiser to decide any difference. Each appraiser will state separately the actual cash value and the amount of loss. An award in writing by any two appraisers will determine the amount payable.
| Explanations
Unlike the rest of our fault-based sample policy, this Part says that the insurance company pays for a “loss,” rather than damages. That means that whatever happens to your car or its equipment as a result of any type of risk, the company will compensate you after you pay your deductible. With regard to wear and tear or mechanical breakdown of your vehicle, the insurer treats each event individually, not cumulatively with regard to the deductible. In other words, you pay a separate deductible for each loss. For example, if your car breaks down on the road and you have to pay for mechanical repairs, and then it has a similar problem a week later, you will have to pay a separate deductible.
You will not have to pay the deductible if you have a collision with another car insured by the same insurance company, an uninsured motor vehicle, or if the other (insured) driver is at fault for the accident.
The insurance company gives itself a choice in the policy wording to pay you for your loss either in money, repairs, or replacement of the damaged or stolen items. Another choice the company gives itself, is that should your stolen items be recovered before the insurance company has paid you or replaced your items, they may pay you for any damage to the items and give the items back to you; or, they may keep the damaged items and pay you for their appraised or agreed upon value; or, if you keep the damaged property, the insurance company may then deduct its value from their payment to you.
This section of the policy provides for appraisers at the request of either you or the company if there’s any question regarding the value of your loss.
Additional Payments
Unlike many of the other coverages in our sample fault-based policy, the All Risks Physical Damage section allows for additional payments to be made to you under certain circumstances. The policy says:
(1) We will pay for loss of your clothing and luggage and that of a relative, not to exceed $200 for any one occurrence, providing the loss is caused by fire, lightning, flood, falling objects, theft of the entire car or collision. (2) If there is a total theft of your insured car we will pay up to $15 per day, but no more than $450 for the cost of transportation incurred by you. This coverage begins 48 hours after the theft and ends when the car is returned to use or when we offer to pay the loss.
If other loss under this coverage occurs to your insured car, we will pay you up to $15 per day, but no more than $150 in the aggregate, for the costs of transportation you incur.
(3) A reward of $250 will be paid for information leading to the arrest and conviction of anyone stealing or vandalizing your insured car. |
Explanations
Most of the Additional Payments section is self-explanatory, but number (2) requires some clarification. The insurer is agreeing here to pay you $15 a day if your car is stolen, up to a total of $450 for transportation, whether you use it for a rental car or public transit. They cut off this coverage before the $450 if you’ve gotten your car back, or if they’ve made you an offer to settle your claim. You don’t have to accept their offer, but once they’ve made that offer, the $15 a day for transportation comes to a grinding halt.
If the loss to your car was something other than by theft, such as damage from flood or an earthquake or it was hit by lightning, you get the same $15 a day, but they cut it off at $150 rather than $450.
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