What Coverage Do You Have When You Drive Away? 

by Mandy Doctoroff

Knowing Your Automobile Physical Damage Coverage

One of the more frequent calls fielded in the Underwriting Department addresses the questions: “How are my vehicles covered?” and “Why should I choose Specified Perils Coverage and not Comprehensive Coverage? Unfortunately, the call usually reaches our ears after an accident occurs once it is too late to change the course of events.  If you come away from reading this article learning only one thing, it should be that you should know your coverage before you take that trip. 

Automobile Physical Damage (APD) is coverage for damage to district owned vehicles.  There are three types of physical damage coverage for motor vehicles:  Collision, Comprehensive, and Specified Perils.  

  • Collision Coverage is used when your covered vehicle (automobile or mobile equipment) collides or crashes into another vehicle or stationary object such as a pole or fence.
  • The other two types of coverage, Comprehensive and Specified Perils Coverage, are similar in that they are both Other Than Collision (OTC) coverage, which is defined as “loss from any cause except collision.” 

The basic difference between the two is that Comprehensive Coverage includes protection for glass breakage, damage done by an animal, and loss resulting from rain, snow, or sleet (whether or not wind driven), while Specified Perils does not. 

Specified Perils is a list of ten specific risks that could occur to your vehicles and only these ten risks are covered: 

  • Loss caused by fire or lightning
  • Smoke or smudge due to sudden, unusual, and faulty operation of any fixed heating equipment serving the premises in which the covered automobile and mobile equipment are located
  • Stranding, sinking, burning, collision, or derailment of any conveyance in or upon which the covered automobile or mobile equipment is being transported
  • Theft or larceny
  • Windstorm, hail, earthquake, or explosion
  • Riot or civil commotion
  • The forced landing of any aircraft or its parts or equipment
  • Malicious mischief or vandalism
  • Flood or rising waters
  • External discharge of leakage of water

As  a program participant, you have the opportunity to review the two coverages and determine which is best for your district.  Because they are so similar, cost typically plays a major factor in the decision-making process as Comprehensive Coverage covers a broader range of potential issues and is therefore  more expensive than Specified Perils Coverage.  The following two scenarios may help you determine which level of coverage is best for your district. 

Scenario One
If your District is in an area with deer behind every tree and bush, choosing coverage that excludes this risk may not be the best option.  If this is a frequent type of claim and you choose coverage that excludes this risk, the out-of-pocket expense could be greater than you want to pay per year.  In this scenario, the best way to determine your coverage is to consider the annual price of Comprehensive Coverage and determine if it is a better long-term value for your district.    

Scenario Two
Specified Perils coverage can be useful if you believe you only need certain incidents covered or if the cost savings is a long-term benefit.  Assume, the majority of your fleet consists of mowers.  In this situation, it’s likely there may not be as great a concern for glass breakage or hitting an animal.  Or, perhaps  you have a rock chip claim that is not covered by Specified Perils and the total repair estimate is less than the long-term contribution you would pay for Comprehensive Coverage.  In this case, looking at the whole picture means you probably saved money in the long-term because the long-term cost savings outweighs a short-term loss expense.

No matter which option you choose, don’t let coverage price govern your choice. 

Choosing the right option for your district will save you money and headaches down the road.   The key is to look at the whole picture and weigh cost savings and coverage options cautiously.  The best part about having  your automobile coverage with  the TASB Risk Management Fund is that we can help you personalize  your coverage to match your unique district needs. 

Let us know which coverage works best for your district. Remember, you’re in the driver’s seat.  Call our Underwriting Department at 800.482.7276 for any questions you may have.


Disclaimer: This newsletter is intended for Fund members only and any unauthorized distribution not approved by the Fund is strictly prohibited. The newsletter is for educational purposes only and contains information to facilitate a general understanding of the law. It is not an exhaustive treatment of the law on this subject, nor is it intended to substitute for the advice of an attorney. Consult with your own attorneys to apply these legal principles to specific fact situations.