7.1 Part D - Coverage for Damage to Your Auto

Part D: Coverage for Damage to Your Auto

Part D of the ISO Personal Auto Policy (form PP 00 01, current 06 18 edition) is the first-party physical damage section. Unlike Parts A, B, and C (liability, medical payments, and uninsured motorists), Part D pays for damage to the insured's own covered auto regardless of fault. It is optional coverage that the named insured purchases per-vehicle, and lenders require it whenever a car is financed or leased. Each covered auto carries its own deductible and its own pair of coverages.

Part D contains two distinct insuring agreements that are scheduled separately on the Declarations:

• Collision - the upset of your covered auto or its impact with another vehicle or object.
• Other Than Collision (OTC), marketed as comprehensive - all other direct and accidental loss except collision.

Collision Defined

The policy defines collision as the upset of your covered auto or non-owned auto, or its impact with another vehicle or object. "Upset" means rollover; "impact" includes hitting a guardrail, tree, building, or another car. Hitting a deer at speed is the classic trap: striking an animal is treated as OTC, not collision, because the form specifically lists "contact with bird or animal" as a comprehensive peril. Many candidates miss this on the exam.

Other Than Collision (Comprehensive) Perils

The PAP defines OTC by listing the perils so the adjuster knows a loss is comprehensive rather than collision (which carries a separate, sometimes higher deductible). Named OTC perils include:

Glass breakage is payable under either coverage at the insured's option, but if the glass breaks in a collision, the insured may include it under collision to avoid two deductibles. A tree falling on a parked car is OTC; running into that same tree is collision.

Valuation: Actual Cash Value (ACV) and the LKQ Limit

The PAP limit of liability for Part D is the lesser of: (1) the actual cash value of the stolen or damaged property, or (2) the amount necessary to repair or replace the property with other property of like kind and quality (LKQ). This is a least-of clause, so the insurer never pays more than ACV even if repairs cost more.

Actual cash value is typically replacement cost minus depreciation. Personal auto is an indemnity contract: the insured is restored to pre-loss condition, never enriched.

Worked ACV example. A 6-year-old sedan is totaled. Replacement cost of a comparable car is $24,000; the adjuster applies 55% depreciation for age, mileage, and condition.

• ACV = $24,000 x (1 - 0.55) = $10,800
• Less the $500 collision deductible = $10,300 net claim payment

If the insured owes $13,500 on the loan, there is a $3,200 gap the PAP will not pay - which is why GAP coverage or a loan/lease endorsement matters.

Deductibles and Coverage Triggers

Deductibles apply per occurrence, per coverage. A car damaged by a flood (OTC) and later in a fender-bender (collision) in the same policy period pays two separate deductibles. The OTC deductible is often lower (e.g., $100 glass, $250 comprehensive) than the collision deductible ($500-$1,000) because comprehensive losses are usually smaller and out of the driver's control.

Transportation Expenses are built into Part D at a default sublimit, commonly $20 per day / $600 maximum, payable for: (1) a rental after a theft of the entire covered auto (begins 48 hours after theft), or (2) loss of use due to an OTC or collision loss to a covered auto if the insured purchased the matching coverage. Theft transportation expenses require no purchased physical-damage coverage on the stolen vehicle - that is a common exam point.

What Counts as "Your Covered Auto" for Part D

Part D follows the four categories of your covered auto in the Definitions: (1) any vehicle shown on the Declarations; (2) a newly acquired auto; (3) any trailer you own; and (4) a temporary substitute auto. Newly acquired auto rules are heavily tested:

• If the insured already carries Part D on at least one auto, an additional newly acquired auto has comprehensive/collision automatically for 14 days, but only if the insured asks the insurer to insure it within that period.
• A replacement vehicle keeps the same Part D coverage as the vehicle it replaced; the insured must ask within 14 days to add coverage broader than what carried over.

Non-owned autos used by the insured get the broadest Part D coverage applying to any covered auto on the Declarations, subject to the highest applicable deductible. This is how rental cars are often covered without a separate policy - but only up to ACV/LKQ and minus the deductible.