7.1 Part D Coverage for Damage to Your Auto (collision, other-than-collision)

What Part D Insures

Part D - Coverage for Damage to Your Auto is the first-party physical damage section of the ISO Personal Auto Policy (PAP), form PP 00 01 (09 18 edition). First-party means it pays for damage to the insured's own vehicle. Contrast this with Part A - Liability, which pays for damage the insured causes to other people's property.

Part D contains two coverages that an insured may buy separately, each carrying its own deductible:

• Collision
• Other Than Collision (OTC), also marketed as Comprehensive

Neither is legally required (they are not liability coverage), but a lienholder (lender) almost always requires both while a loan or lease is outstanding.

The declarations page shows which vehicles carry Collision and OTC and the deductible for each. A vehicle may have liability only (no Part D), which is common for older cars whose ACV no longer justifies the premium.

Remember the directional contrast tested repeatedly: Part A and Part B address injuries and others' property; Part D addresses the insured's own vehicle. A single accident can trigger Part A (the other driver's bumper), Part B or PIP (the insured's medical bills), and Part D (the insured's own car) all at once, each subject to its own limit and deductible.

Collision

Collision is defined as the upset (overturn) of the covered auto or its impact with another vehicle or object. Collision pays regardless of fault.

If the insured is at fault, their own Collision coverage still repairs the car (deductible applies). The insurer may then subrogate - pursue recovery from a negligent third party and, on success, refund the insured's deductible pro rata.

Typical Collision losses:

• Striking another vehicle
• Hitting a guardrail, tree, pole, or building
• Backing into a fixed object
• Rolling or overturning the vehicle

Other Than Collision (Comprehensive)

Other Than Collision (OTC) covers physical damage from causes other than collision or upset.

Exam alert: hitting a deer is Other Than Collision. But if the driver swerves to avoid the deer and hits a tree, the loss is Collision - the covered cause is the impact with the tree, not the animal.

How Part D Settles a Claim

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. The governing formula is ACV = Replacement Cost - Depreciation.

Worked partial loss: repair estimate $5,000; ACV $15,000; deductible $500. The lesser figure is the $5,000 repair, so the insurer pays $5,000 - $500 = $4,500.

Worked total loss: repair estimate $12,000; ACV $10,000; deductible $500. The lesser figure is the $10,000 ACV, so the insurer pays $10,000 - $500 = $9,500, declares a total loss, and keeps the salvage.

Deductibles and Transportation Expense

A higher deductible lowers premium because the insured absorbs more frequent small losses. Part D also includes Transportation Expenses - commonly $20 to $30 per day up to about $600 for a rental after a covered theft or loss (theft losses carry a waiting period before benefits begin).

Depreciation and Total-Loss Mechanics

Because settlement uses ACV, the insured bears the depreciation. A car bought new for $30,000 with a current replacement cost of $24,000 and 30% depreciation has an ACV of about $24,000 x (1 - 0.30) = $16,800. That ACV - not the original price - caps the payout.

When repair cost meets or exceeds ACV (often around 70-80% of ACV under insurer guidelines), the carrier declares a constructive total loss, pays ACV less the deductible, and takes the salvage title. The insured may sometimes retain salvage, in which case the salvage value is subtracted from the settlement.

Newly Acquired Autos

Part D follows the PAP's newly acquired auto rules. A replacement vehicle automatically gets the same Part D coverage as the car it replaces. An additional vehicle is covered for the broadest Part D coverage on any vehicle on the policy but the insured must ask the insurer to add it - commonly within 14 days (some editions allow up to the end of the policy period if the insured has no other physical-damage coverage).

Exam alert: if the policy carried no Part D on any auto, a newly acquired vehicle gets only $0 deductible physical damage for 4 days, and the insured must request coverage within that window. Memorize whether the policy already had physical damage when answering newly-acquired-auto questions.