Property damage expenses pay for the repair or replacement of things you wrecked. Remember, if you cause a serious accident, minimum insurance may not cover you adequately. That's why it's a good idea to buy more than what your state requires. Glossary Liability lingo Insurance types usually refer to liability coverage limits as a series of three numbers. Replacement cost vs. actual value Replacement cost is the amount it would take to replace your vehicle or repair damages with materials of similar kind and quality, without deducting for depreciation.
Depreciation is the decrease in vehicle value because of age or wear and tear.
Claims adjusters usually figure ACV by taking the replacement cost and subtracting depreciation. It's usually better to go with replacement cost coverage. Although the cost is higher, in most cases the extra protection may be worth it. Make sure to ask your agent which kind of coverage you have on your auto policy. If you cause an accident, collision coverage will pay to repair your vehicle.