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Physical Damage Coverage and Single Interest Insurance

Physical damage coverage, or PD, is an insurance product designed to cover the cost of repairs in case of damage to specific property. Most insurance companies offering automobile liability policies also offer PD coverage, sometimes called Comprehensive and Collision. Collision insurance is for damage caused to the vehicle as a result of a crash. Comprehensive coverage is usually limited to damage caused by forces "Other Than Collision", or OTC. The frequently used term Comp. and Collision refers to the packaging of Collision and OTC coverages. By maintaining these two types of insurance, one can protect against financial loss through destruction.

Automobile loans typically require the borrower to purchase PD as a condition of the contract, to protect the lending institution's investment in the loan. The coverage is sometimes called dual interest coverage, because the interests of both the lender and the borrower are satisfied. In those cases where the borrower is unable to provide PDC, the lending institution may purchase single interest coverage. This type of insurance protects against physical damage up to the outstanding loan balance, and may not offer the same features as dual interest policies.

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This page last updated 4.6.98