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Physical Damage Coverage plays a pivotal role in safeguarding your investment when it comes to purchased or leased equipment in the unfortunate event of loss or damage.

Types of Insurances

This type of insurance is typically categorized into two primary coverages: Comprehensive Coverage and Collision Coverage. Each of these coverages serves a distinct purpose in protecting your assets.

Collision Coverage

This component of Physical Damage Coverage comes into play when your equipment is involved in a collision or overturns. In such cases, Collision Coverage provides financial support to repair or replace the damaged equipment.

Comprehensive Coverage

Comprehensive Coverage, on the other hand, extends its protective umbrella to cover a wide array of other physical damage losses. This may include damage caused by fire, theft, vandalism, windstorms, or even incidents involving contact with animals.

It’s important to note that these two coverages, Collision and Comprehensive, are treated as separate entities in the insurance world. Collision Coverage often comes with a relatively higher premium compared to Comprehensive Coverage. Moreover, it can significantly impact the renewal pricing of your insurance following a loss. This approach is based on the statistical premise that individuals who have experienced a collision are generally viewed as a higher risk compared to those who have encountered damage from less severe events like hailstorms.

However, it’s crucial to bear in mind that Physical Damage Coverage doesn’t extend its protection to cover “wear and tear.” This type of insurance is not designed to address the normal, expected deterioration of equipment. Instances such as rusted parts, worn brake pads, or a blown transmission typically fall outside the purview of this coverage.

Exclusive Coverages within Physical Damage

Additionally, Physical Damage Coverage may offer access to several exclusive coverages that may only be available when paired with it. These can include:

    • Full Glass Protection: This coverage ensures that your equipment’s glass components, such as windshields and windows, are protected from damage.

    • Permanently Attached Equipment: It covers equipment that is permanently affixed to your vehicle, such as a Wet Kit, decals, or aftermarket rims.

    • Rental Reimbursement: This coverage helps cover the cost of renting a replacement vehicle while your damaged equipment is being repaired or replaced.

    • Downtime: Downtime coverage can compensate you for income lost during the time your equipment is out of commission due to damage.

    • Roadside Assistance: It provides assistance in the event of breakdowns or emergencies on the road, ensuring that you receive timely help when you need it.

Exploring Gap Coverage

In addition to Physical Damage Coverage, lessees often consider purchasing Gap Coverage, especially when leasing a vehicle. Gap Coverage is specifically designed to bridge the financial gap between the balance of a lease or loan on your vehicle and its actual cash value in the event of a total loss.

To illustrate, suppose you purchase a tractor for $50,000 and accumulate 80,000 miles on it in the first year. Unfortunately, a total loss occurs, and your insurance company determines the vehicle’s value at the time of loss to be $35,000. However, you still owe $40,000 on the loan. In this scenario, Gap Coverage would step in to cover the $5,000 difference (minus your deductible), ensuring you’re not left with a financial burden.

 

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