Future Business Leaders of America (FBLA) Personal Finance Practice Test

What does Comprehensive Physical Damage coverage in automobile insurance address?

1. Accidents involving other vehicles

2. Vehicle damage from a non-accident situation

3. Liability coverage for bodily injury

4. Car theft and vandalism

The correct answer is: Vehicle damage from a non-accident situation

Comprehensive Physical Damage coverage in automobile insurance is designed to address damage to a vehicle that occurs outside the context of a collision with another vehicle. This type of coverage specifically handles situations where the vehicle sustains damage from non-accident-related incidents. For instance, if a car is damaged by natural disasters like floods or hail, or if it suffers from fire, theft, vandalism, or hitting an animal, comprehensive coverage would provide financial protection for the owner. It's essential to understand that this coverage is separate from liability coverage, which pertains to injuries or damages caused to another party in an accident, and collision coverage, which would apply when a vehicle is involved in a crash with another vehicle or object. Therefore, the correct response accurately reflects the scope of comprehensive coverage, focusing on the situations it encompasses, rather than others that involve accidents or liabilities.