Physical damage insurance is actually two separate coverages - comprehensive and collision. Neither are required by law, but lenders usually insist on it.

Comprehensive, sometimes called other than collision, pays for damage to the insured vehicle due to theft, vandalism, fire, flood, hail, an animal hit, windshield rock chip, and more. There are a variety of comprehensive deductible options to consider. Keep in mind that a high deductible lowers the premium, but you pay more out-of-pocket if there is a loss. Turning in a comprehensive claim does not affect policy premium.

Collision pays for damage to the insured vehicle caused by crashing into another vehicle, tree, pole, fence or guardrail, hitting a pothole, or rolling the vehicle. You can make a collision claim even if another driver is legally responsible for the crash. Subrogation allows your insurer to pay damages, less the collision deductible, and seek reimbursement from the other driver. Insurers offer several collision deductible options, often starting at $500. Making a collision claim, even for a not-at-fault crash, could affect your insurance rate.

A policy that has collision must also include comprehensive, liability and uninsured motorist coverages. Policyholders may, however, buy comprehensive coverage without collision.

Consider adding uninsured motorist property damage if you opt for a liability, comprehensive and uninsured motorist policy. UMPD pays for damage to the insured vehicle caused by an identified, uninsured driver. This coverage typically has a $250 deductible and $10,000 pay out limit.

Without comprehensive and collision insurance the vehicle owner must pay for repairs out-of-pocket or seek reimbursement from the at-fault driver (either directly or through his/her insurance company).