7.1 Part D: Coverage for Damage to Your Auto (Collision, Other Than Collision)

First-Party Coverage for Your Own Vehicle

Part D - Coverage for Damage to Your Auto is the physical-damage section of the ISO Personal Auto Policy (form PP 00 01). Unlike Part A (Liability), which pays third parties for damage you cause, Part D is first-party coverage: it pays to repair or replace your covered auto. The exam tests this distinction constantly, so anchor the rule firmly: Part A protects your net worth from claims by others; Part D protects your car from physical loss.

Part D contains two coverages an insured may purchase separately, each with its own deductible: Collision and Other Than Collision (OTC). Neither is mandatory under state financial-responsibility laws, but a lender or lessor will require both on a financed or leased vehicle to protect its security interest.

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 you cause the accident, your own Collision still repairs your car, subject to the deductible, and the insurer may subrogate against an at-fault third party to recover what it paid (and, if successful, refund your deductible pro rata).

Typical Collision losses:

• Striking another vehicle in traffic
• Hitting a guardrail, tree, building, or light pole
• Backing into a fixed object
• Rolling or overturning the vehicle
• Striking a pothole hard enough to damage the car

Other Than Collision (Comprehensive)

Other Than Collision (OTC), historically called Comprehensive, covers physical loss from causes other than collision or upset. The PAP lists representative perils:

Exam alert: Hitting an animal (deer, dog, cow) is Other Than Collision, not Collision. But if you swerve to avoid the deer and hit a tree, that is Collision - the loss is the impact with the tree. The trigger is the loss that actually happened, not the hazard that started the chain.

Collision vs. OTC Quick Reference

How Part D Settles a Loss - the ACV Formula

The insurer pays the lesser of:

1. the vehicle's Actual Cash Value (ACV), or
2. the cost to repair or replace the damaged property,

and then subtracts the deductible. The governing identity is:

ACV = Replacement Cost - Depreciation

Memorize the two-step logic - compare repair cost to ACV, take the smaller, then subtract the deductible.

Worked Example 1 - Partial Loss

Repair estimate $5,000; vehicle ACV $15,000; Collision deductible $500.

• Lesser of $5,000 (repair) and $15,000 (ACV) = $5,000
• Less the $500 deductible = $4,500 paid

Worked Example 2 - Total Loss

Repair estimate $12,000; vehicle ACV $10,000; deductible $500.

• Lesser of $12,000 (repair) and $10,000 (ACV) = $10,000
• Less the $500 deductible = $9,500 paid

When the repair cost meets or exceeds ACV (or a state's total-loss threshold, often 70-80% of ACV), the insurer declares a total loss, pays ACV minus the deductible, takes the salvage, and in most states adds applicable sales tax and title/registration fees so the insured can buy a comparable replacement.

Worked Example 3 - Depreciation Applied

A five-year-old vehicle has a replacement cost of $28,000 and has depreciated 40%.

• Depreciation = 0.40 x $28,000 = $11,200
• ACV = $28,000 - $11,200 = $16,800

If that vehicle is totaled and the deductible is $1,000, the insurer pays $16,800 - $1,000 = $15,800 (plus sales tax/fees where required), and keeps the salvage.

Deductibles

A deductible is the amount the insured retains on each loss before the insurer pays.

A higher deductible lowers the premium because the insured absorbs the small, frequent losses the insurer would otherwise process. Glass-only deductibles are frequently waived to encourage prompt windshield repair before a chip spreads.

Trap: the Part D deductible applies per occurrence, not per policy year. Two separate covered losses each trigger the full deductible.

Coverage on Non-Owned and Temporary Substitute Autos

Part D follows the broadest physical-damage coverage already on the policy to a non-owned auto the named insured or a family member is operating - and to a temporary substitute used while a covered auto is being repaired, serviced, or is destroyed. It never extends to a vehicle furnished for the insured's regular use. This is the basis for the classic rental-car answer: if the insured carries Collision and OTC on the personal car, that coverage typically follows to a short-term rental, subject to the policy deductible.

Many travelers still buy the rental company's collision damage waiver to avoid the deductible and loss-of-use disputes, but on the exam the default is that the insured's own Part D follows to a temporary non-owned auto.

Salvage and the Appraisal Provision

When a vehicle is declared a total loss, the insurer establishes ACV using comparable-vehicle valuation tools, current market listings, and condition adjustments, then pays ACV minus the deductible and takes the salvage, which it may sell to offset the loss. If the insured disputes the ACV, the PAP's appraisal condition (in Part F) lets each side hire an appraiser; if the two disagree, a neutral umpire decides, and the cost of the umpire is shared. Remember this mechanism for total-loss valuation disputes - it is the orderly alternative to litigation.