7.1 Part D: Coverage for Damage to Your Auto

Part D Is First-Party Property Coverage

Part D - Coverage for Damage to Your Auto is the physical damage section of the ISO Personal Auto Policy (PP 00 01). It is first-party coverage: it pays to repair or replace your covered auto regardless of fault. Contrast it with Part A (Liability), which is third-party and pays for damage you cause to others. Part D is the only Part of the PAP that is optional in most states - a lienholder, not the law, usually forces an insured to carry it.

Part D contains two distinct coverages, each purchased separately and each carrying its own deductible:

• Collision - upset (overturn) of your covered auto, or its impact with another vehicle or object.
• Other Than Collision (OTC), also called Comprehensive - virtually every other direct/accidental loss.

A key exam fact: Collision pays even when you are at fault. Fault determines who pays under liability, never under your own physical-damage coverage.

Collision Defined

Collision means the upset of your covered auto or its impact with another vehicle or object. "Upset" includes a rollover even without striking anything. A single-car crash into a guardrail, a rear-end collision, and a vehicle sliding into a ditch are all Collision losses. Collision pays regardless of fault, but only after the Collision deductible is subtracted.

Other Than Collision (Comprehensive)

OTC covers direct and accidental loss to your auto not caused by collision. The PAP lists examples that the exam loves to test:

Trap: Hitting an animal is OTC, not Collision - even though it feels like an impact. The PAP specifically assigns "contact with a bird or animal" to Other Than Collision.

Why the Collision vs. OTC Distinction Matters

The split matters because the two coverages carry separate deductibles and are priced differently. OTC is statistically cheaper because comprehensive losses (glass, theft, hail) average lower severity than at-fault crashes, so insureds often select a lower OTC deductible than their Collision deductible.

It also drives claim handling. If a tree limb falls and crushes the hood while parked, that is OTC. If the same car then rolls down a hill into a fence, that is Collision. One windstorm event can produce both an OTC and a Collision claim, but the loss conditions generally apply a single deductible to a single occurrence rather than stacking two.

Glass-Breakage Election and Loss Settlement

Glass breakage is normally OTC, but the policy lets the insured elect to have glass breakage caused by a collision treated as a Collision loss (so a single deductible applies when glass shatters in a crash). This avoids paying two deductibles for one accident.

How Part D Values a Loss - ACV

The PAP limit of liability for physical damage is the lesser of:

1. the Actual Cash Value (ACV) 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.

ACV = Replacement Cost - Depreciation. The PAP pays ACV (depreciated value), not replacement cost, unless a separate endorsement is added. The insurer may also deduct an adjustment for betterment.

Worked Example - Repairable Loss

A covered auto with an ACV of $15,000 sustains $12,000 in collision damage. The Collision deductible is $500.

• Repair cost ($12,000) is less than ACV ($15,000), so the loss is repaired, not totaled.
• Insurer pays = repair cost - deductible = $12,000 - $500 = $11,500.

Total Loss and Sublimits

When repair cost meets or exceeds ACV, the vehicle is a total loss and the insurer pays ACV minus the deductible.

Worked Example - Total Loss

ACV $15,000, damage $16,000, $500 deductible. Because damage exceeds ACV, the insurer settles at ACV: $15,000 - $500 = $14,500 (and takes the salvage).

Built-in Sublimits the Exam Tests

• Electronic equipment not permanently installed: limited (commonly $1,500) unless scheduled.
• Custom furnishings/equipment on a pickup/van: excluded unless covered by the Customizing Equipment Coverage endorsement (PP 03 35).
• Transportation Expenses (rental reimbursement): the PAP gives a small base amount, typically $20 per day / $600 maximum, payable after a 48-hour waiting period following a theft, and only if physical damage coverage applies.
• Towing and Labor: only if the Towing and Labor Costs endorsement (PP 03 03) is added.

Transportation Expense and the Loss-of-Use Sublimit

Part D includes a built-in transportation expenses / loss of use coverage the exam likes to quantify. After a covered other-than-collision (comprehensive) theft of the entire auto, the policy pays a stated daily amount (commonly $20/day up to $600) for temporary transportation, but only after a waiting period (often 48 hours) following a theft. For non-theft physical-damage losses, the same daily allowance applies when the auto is being repaired, beginning when the loss exceeds the deductible.

Candidates should distinguish this small built-in benefit from the broader Rental Reimbursement endorsement, which an insured can buy to raise the daily and aggregate limits. Part D also pays the reasonable cost to return a stolen covered auto to the insured. Because these allowances are sublimits separate from the auto's ACV, a total-loss settlement and a transportation-expense payment can both apply to the same theft.