7.1 Part D - Coverage for Damage to Your Auto
Key Takeaways
- Part D is first-party physical damage coverage that pays to repair or replace your own auto, split into Collision and Other Than Collision (Comprehensive).
- Collision is upset (overturn) or impact with another vehicle or object; OTC covers theft, fire, glass, flood, hail, vandalism, falling objects, and animal contact.
- Settlement equals the LESSER of Actual Cash Value (replacement cost minus depreciation) or repair cost, minus the deductible chosen for that coverage.
- Hitting an animal such as a deer is an Other Than Collision loss, not Collision - a heavily tested distinction.
- Transportation Expense pays a per-day amount up to a stated maximum after a covered loss; custom and electronic equipment require endorsements.
First-Party Coverage for Your Own Vehicle
Part D - Coverage for Damage to Your Auto is the first-party section of the ISO Personal Auto Policy (form PP 00 01, current ISO edition). It pays to repair or replace the named insured's own auto. Compare this to Part A (Liability), which pays for damage the insured causes to others. Part D is optional - a state may mandate liability but not physical damage - though lenders require it while a loan is outstanding.
Part D contains two coverages an insured may buy separately, each carrying its own deductible: Collision and Other Than Collision (Comprehensive). A vehicle may carry both, one, or neither - many insureds drop physical damage on older, low-ACV vehicles because the premium can exceed the recovery available.
Covered autos for Part D include any auto shown in the Declarations, a newly acquired auto (additional or replacement, with notice rules), a trailer the insured owns, and a non-owned auto or temporary substitute used by the insured. A newly acquired replacement vehicle gets the broadest physical damage coverage the insured carried on the replaced auto; a newly acquired additional vehicle is covered but the insured generally must ask for physical damage within 14 days (edition-dependent).
Collision Coverage
Collision is defined as the upset (overturn) of your covered auto or its impact with another vehicle or object. Collision pays regardless of fault - if the insured is at fault, the insured's own Collision still repairs the car after the deductible, and the insurer may subrogate against any responsible third party to recover.
Covered Collision examples include:
- Striking another vehicle in an intersection
- Hitting a guardrail, tree, building, or utility pole
- Backing into a fixed object
- Rolling or overturning the vehicle
- Pothole impact that damages the suspension
A key trap: swerving to avoid a deer and striking a tree is Collision, because the actual loss is the impact with the tree, not contact with the animal.
Other Than Collision (Comprehensive)
Other Than Collision (OTC), commonly called Comprehensive, covers direct and accidental loss from causes other than collision. The PP 00 01 lists the perils, and examiners test the list directly.
| Peril | Example |
|---|---|
| Theft or larceny | Entire vehicle stolen |
| Fire or explosion | Engine compartment fire |
| Glass breakage | Cracked or shattered windshield |
| Flood or rising water | Vehicle submerged |
| Hail, windstorm | Hail dents, flying debris |
| Vandalism, malicious mischief | Keyed paint, slashed tires |
| Falling objects | Tree limb crushes roof |
| Contact with bird or animal | Deer strike |
| Riot or civil commotion | Damage during unrest |
| Missiles or falling objects | Rock thrown from mower |
Exam alert: Contact with an animal (deer, dog, livestock) is Other Than Collision, NOT Collision. This single distinction appears on nearly every PAP exam.
How Part D Settles a Loss
The insurer pays the LESSER of:
- the vehicle's Actual Cash Value (ACV), or
- the cost to repair or replace the damaged property,
minus the deductible chosen for that coverage. The defining formula is ACV = Replacement Cost - Depreciation.
Worked Examples
Partial loss (repairable): Repair estimate $5,000; vehicle ACV $15,000; Collision deductible $500. The insurer pays the lesser of repair ($5,000) or ACV ($15,000), minus deductible: $5,000 - $500 = $4,500.
Total loss: A vehicle with ACV $12,000 is stolen and never recovered. OTC deductible $250. The insurer pays $12,000 - $250 = $11,750. The deductible still applies even on a total loss.
Depreciation: A car cost $30,000 new and has depreciated 40%. ACV = $30,000 - $12,000 = $18,000. If the repair estimate of $20,000 exceeds ACV, the insurer pays ACV (less deductible) and declares a constructive total loss.
The GAP Exposure
Because Part D settles on ACV, not loan balance, an insured who owes more than the car is worth after a total loss faces a gap. Example: ACV $18,000, loan balance $22,000, deductible $500. Part D pays $17,500; the insured still owes the lender $4,500. GAP coverage (Guaranteed Asset Protection), available by endorsement or from the lender, fills this difference. New vehicles depreciate fastest in the first months, so the gap exposure is largest early in a loan - a commonly tested point.
An insured swerves to avoid a deer in the road, leaves the lane, and strikes a tree, damaging the front end. Under Part D of the PAP, this loss is covered as:
Transportation Expense and Equipment Limits
Transportation Expense (also called rental reimbursement) under Part D pays a stated per-day amount up to a maximum while the insured's covered auto is out of service due to a Part D loss. A common limit is $30 per day / $900 maximum, though limits are increasable by endorsement. For a theft loss, coverage begins 48 hours after the theft is reported and runs until the auto is returned to use or the insurer pays for the loss.
Electronic and custom equipment have special limits. Tapes, records, discs, and aftermarket electronic equipment not permanently installed are typically subject to a low sublimit (historically $200) unless scheduled by an endorsement such as the Customizing Equipment or Audio, Visual and Data Electronic Equipment endorsement.
A covered auto with an ACV of $9,000 is damaged in a covered collision. The repair estimate is $11,500 and the Collision deductible is $500. How much will the insurer pay?