7.1 Part D: Coverage for Damage to Your Auto

First-Party Coverage for Your Own Vehicle

Part D - Coverage for Damage to Your Auto of the ISO Personal Auto Policy (PP 00 01) is first-party protection: it pays to repair or replace your covered auto and certain non-owned autos you operate. Contrast this with Part A (Liability), which is third-party and pays for damage you cause to others. Part D is optional coverage purchased by deductible; lenders require it while a loan or lease is outstanding.

Part D contains two coverages an insured can buy separately, each with its own deductible:

• Collision coverage
• Other Than Collision coverage (commonly called Comprehensive)

Because Part D is first-party, it pays regardless of fault. If you cause the crash, your own Collision still repairs your car (less the deductible), and the insurer may subrogate against an at-fault third party to recover what it paid, including your deductible on a pro-rata basis.

Collision

Collision is defined in the PAP as the upset (overturn) of your covered auto or its impact with another vehicle or object. Collision pays regardless of fault and applies whether the object struck is moving or stationary.

Classic Collision examples tested on the exam:

• Striking another vehicle (rear-ending, intersection crash)
• Hitting a guardrail, tree, pole, building, or curb
• Backing into a fixed object
• Pothole damage and rollover/overturn

Other Than Collision (Comprehensive)

Other Than Collision (OTC), also labeled Comprehensive, covers direct and accidental loss to your auto from causes other than collision. It is the broader of the two coverages and typically carries a lower deductible because the perils are usually smaller-severity.

Exam alert: Hitting an animal (deer, dog) is Other Than Collision, NOT Collision. But if you swerve to avoid a deer and strike a tree, that loss IS Collision - the covered cause is the impact with the tree, not the animal.

How Part D Pays: ACV and the Lesser-Of Rule

The PAP limits Part D recovery to the lesser of:

1. The Actual Cash Value (ACV) of the stolen or damaged property, or
2. The cost to repair or replace the property with like kind and quality,

and then subtracts the deductible. ACV equals replacement cost minus depreciation. The insurer never pays more than ACV, even if repair would cost more - that is when the vehicle is declared a total loss.

Worked Numeric - Deductible and ACV

A covered auto with an ACV of $14,000 sustains hail damage. The repair estimate is $9,800 and the Comprehensive deductible is $500.

• Lesser of ACV ($14,000) or repair ($9,800) = $9,800
• Less deductible $500 = $9,300 paid

Worked Numeric - Total Loss / Gap Exposure

The same vehicle (ACV $14,000) is stolen; the owner still owes $17,500 on the loan. Comprehensive pays ACV $14,000 minus the $500 deductible = $13,500. The owner still owes the lender $4,000 ($17,500 - $13,500). The unpaid balance is the gap, which only an optional loan/lease (GAP) endorsement would cover - the base PAP does not.

Transportation Expense and Towing

The PAP automatically provides a limited Transportation Expenses coverage: typically $20 per day, up to $600 per loss (newer editions may show $30/$900), payable for substitute transportation. Two triggers apply: a theft of your covered auto (after a 48-hour waiting period), or a loss to a non-owned auto in your custody. It also pays loss-of-use expenses the owner of a non-owned auto holds you legally responsible for.

Towing and Labor is a separate optional endorsement (PP 03 03) reimbursing road-service costs (commonly $25-$75 per disablement). Custom or aftermarket electronic equipment and non-factory furnishings need a separate endorsement to be fully insured.

Deductibles, Appraisal, and Repair Settlement

Each Part D coverage carries its own deductible, the amount the insured retains per loss before the insurer pays. Higher deductibles lower premium because the insured absorbs small, frequent losses. When both Collision and OTC deductibles could apply to one event, only the single applicable deductible is subtracted - the policy does not stack them.

When the insurer and insured disagree on the amount of a loss (not coverage), the PAP's Appraisal condition lets either party demand appraisal: each selects a competent appraiser, the two appraisers select an umpire, and an agreement by any two of the three binds the amount. Each party pays its own appraiser and shares the umpire cost.

Like Kind and Quality

The insurer may repair, replace, or pay in money. Repairs must restore the auto to its pre-loss condition with parts of like kind and quality; this is where aftermarket vs. OEM-parts disputes arise. The insurer's obligation is the cost to repair, never more than ACV.

Newly Acquired Autos and Non-Owned Autos

Part D automatically extends to a newly acquired auto. If it replaces a vehicle already on the policy, broad coverage (including the same physical-damage coverage carried on the replaced auto) applies, but the insured must usually ask the insurer to add it within 14 days (an additional acquired auto often has a 4-day or 14-day window depending on edition). If the existing policy has no physical-damage coverage on any auto, an acquired auto gets Part D only if the insured requests it within the stated window, subject to a default deductible (often $500).

Part D also covers a non-owned auto - a private passenger auto, pickup, van, or trailer not owned by or furnished for the regular use of you or a family member - while in the custody of or being operated by an insured. Coverage is no broader than the coverage on the insured's own autos.