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 (PAP, current edition PP 00 01 09 18) is the first-party, physical-damage section. Unlike Parts A and B, which respond to injury or damage the insured causes to others, Part D pays for direct and accidental loss to the covered auto itself and to non-owned autos the insured operates. It is optional coverage purchased separately from liability and, because it protects the lender's collateral, it is almost always required by an auto lienholder for any financed or leased vehicle.

Part D splits physical-damage protection into two named perils and assigns each its own deductible:

• Collision - loss from the covered auto upsetting (overturning) or impacting another vehicle or object.
• Other Than Collision (OTC) - also called comprehensive; everything else listed as a peril.

The distinction matters because the perils carry separate premiums and deductibles, and one loss may trigger only one of them. Hitting a deer is OTC; swerving to miss the deer and striking a guardrail is Collision.

Collision vs. Other Than Collision

The policy defines collision as the upset of the covered auto or its impact with another vehicle or object. Everything the insurer wants to treat as comprehensive is then pulled out of collision and listed under OTC so the lower-rated peril applies. The PAP enumerates OTC causes:

The glass-breakage election is a frequent exam point: glass broken in a collision can be claimed under either peril, and the insured chooses so a single deductible applies to the whole loss rather than two.

Limit of Liability and ACV

Part D pays the lesser of (1) the actual cash value (ACV) of the stolen or damaged property, or (2) the amount necessary to repair or replace it with property of like kind and quality. ACV equals replacement cost minus depreciation - the PAP does not provide replacement-cost coverage on the vehicle itself. After a covered loss the insurer subtracts the deductible from the payable amount.

Worked total-loss example. A 2019 sedan has an ACV of $14,000 and a Collision deductible of $1,000. It is totaled. Settlement:

ACV ................. $14,000
Less deductible ....  -$1,000
Claim payment ......  $13,000

Worked split-deductible trap. The same insured carries $250 OTC and $500 Collision. A hailstorm (OTC) causes $3,200 in damage on Monday; an at-fault collision causes $4,000 on Friday. The hail claim pays $3,200 - $250 = $2,950; the collision claim pays $4,000 - $500 = $3,500. Two separate occurrences, two separate deductibles - they are never blended.

Other Than Collision (Comprehensive) Perils

Part D's Other Than Collision (OTC) coverage — often called comprehensive — pays for direct, accidental loss to the covered auto from causes other than collision. The PAP specifically lists these as OTC rather than collision: fire, theft/larceny, vandalism, malicious mischief, glass breakage, falling objects, missiles, explosion, earthquake, windstorm, hail, water, flood, riot, civil commotion, and contact with a bird or animal. Hitting a deer is OTC, not collision — a near-universal exam item, because hitting another car or object is collision while striking an animal is comprehensive.

Collision Defined and the Transportation-Expense Coverage

Collision is the upset of the covered auto or its impact with another vehicle or object. Part D also provides Transportation Expenses: after a covered theft, the policy reimburses substitute transportation/rental (commonly $20 per day up to $600, with theft losses subject to a 48-hour waiting period). Higher limits are available by endorsement. Knowing the modest default rental figure — and that it is separate from the physical-damage limit — is a frequently tested detail.

Non-Owned Autos and Transportation Expenses

Part D extends physical-damage protection to a non-owned auto - a private passenger vehicle, pickup, or van not owned by or furnished for the regular use of the insured, while in the custody of or being operated by an insured. The broadest deductible-and-coverage combination the insured carries on any owned vehicle applies to the borrowed car. A temporary substitute vehicle (used while the covered auto is out of service for repair) is likewise covered.

Part D also includes a small built-in Transportation Expenses benefit, typically $30 per day / $900 maximum, payable for rental/transportation costs after a theft of the entire covered auto (subject to a 48-hour waiting period) or, when OTC and Collision coverage applies, for transportation expense resulting from a covered loss. This base benefit can be increased by endorsement (Extended Transportation Expense).

Deductibles, Rating, and the Symbol-1/Symbol-2 Idea

Higher deductibles lower premium because the insured retains more frequency. A move from a $250 to a $1,000 Collision deductible can cut the Collision premium materially, but the insured then absorbs the first $1,000 of every collision loss. Comprehensive (OTC) deductibles are usually lower than Collision deductibles because OTC perils tend to be lower-severity and the insurer wants the glass and theft exposures fully participating.

For an exam, remember the deductible is per occurrence, per peril, never per policy term. A common distractor offers an aggregate or annual deductible - the PAP has none. Also, the deductible does not apply to a covered transportation-expense payment or to a loss the insurer pays under a separate provision such as towing.

Stacking myth. Candidates sometimes assume two vehicles on one PAP share a single Part D deductible pool. They do not - each covered auto and each loss stands alone. If a hailstorm damages two scheduled autos in the same event, the OTC deductible is applied to each vehicle separately, producing two deductible reductions even though there was one storm.