Under what condition does physical damage coverage apply to non-owned vehicles in a personal auto policy?

Physical damage coverage in a personal auto policy typically applies to non-owned vehicles on an excess basis. This means that the coverage provided is secondary to any other applicable insurance. If the non-owned vehicle is involved in an accident or suffers damage, the insurance policy will only pay out after the limits of any primary insurance (such as the owner’s policy) have been exhausted.

The rationale behind this is to avoid overlapping coverage, ensuring that the primary insurance from the vehicle's owner is responsible for initial claims. This scenario often arises in situations where an individual may borrow a friend's car or drive a rental vehicle; in these cases, while the personal auto policy offers some protection, it acts as a backup rather than the first line of defense.