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

Part D in the PAP Structure

Part D - Coverage for Damage to Your Auto is the physical damage section of the ISO Personal Auto Policy (PAP), currently the PP 00 01 form. It is first-party coverage: it repairs or replaces the insured's own vehicle, in contrast to Part A - Liability, which is third-party.

Unlike liability, Part D is optional under state law but is required by virtually every lender or lessor that holds a security interest in the auto.

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

• Collision
• Other Than Collision (OTC), also called Comprehensive

Collision

Collision is defined as the upset (overturn) of your covered auto or its impact with another vehicle or object. It pays regardless of fault - an at-fault insured's own car is still repaired, subject to the deductible, after which the insurer may subrogate against a responsible third party.

Typical Collision losses: striking another car, hitting a guardrail, tree, building, or pothole, backing into a pole, and rolling the vehicle.

Other Than Collision (Comprehensive)

Other Than Collision covers physical damage from causes other than collision and overturn.

Exam alert: hitting a deer is Other Than Collision. But swerving to avoid the deer and striking a tree is Collision - the loss is the impact with the tree.

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,

minus the deductible. The governing formula is ACV = replacement cost - depreciation.

Worked Examples

Partial loss: repair cost $5,000; ACV $15,000; deductible $500. Repair is the lesser figure, so the insurer pays $5,000 - $500 = $4,500.

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

When repair cost meets or exceeds ACV, the carrier totals the vehicle, pays ACV less deductible (plus, in most states, sales tax and title fees), and keeps the salvage.

Deductibles

A higher deductible lowers the premium because the insured retains the small, frequent losses.

Transportation Expenses and the Gap

Part D includes Transportation Expenses - a per-day benefit (commonly $20-$30/day up to about $900 total under current editions) for substitute transportation after a covered loss, with a waiting period for theft. Standard Part D does not pay the loan/lease gap - the shortfall when the balance owed exceeds ACV (owe $25,000, ACV $20,000 = a $5,000 gap). That requires a separate loan/lease gap endorsement.

Common Exclusions

• Wear and tear, freezing, mechanical or electrical breakdown - maintenance, not fortuitous loss
• Road damage to tires alone
• Aftermarket electronic equipment (factory-installed is covered)
• Racing or speed contests
• War, nuclear hazard, radioactive contamination

Trap: Part D does not pay diminished value on the insured's own first-party claim - it pays the lesser of ACV or repair cost only.

Covered Autos and Newly Acquired Autos

Part D follows your covered auto, newly acquired autos, and a non-owned auto the insured or a family member operates - but only at the broadest physical-damage coverage already on the policy.

Newly Acquired Auto Rules

Trap: if the insured carries only liability and buys a replacement car, no physical-damage coverage attaches automatically - there is nothing to copy from.

Non-Owned and Rental Autos

If the insured carries Collision and OTC on a personal car, that coverage typically follows to a short-term rental, subject to the policy deductible and to the rule that the auto is not furnished for the insured's regular use.

Many travelers still buy the rental company's collision damage waiver (CDW) 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.

Appraisal Provision

If the insured and insurer disagree on the amount of a physical-damage loss, the PAP's appraisal clause lets each side hire an appraiser; if the appraisers disagree, an umpire decides. Appraisal resolves the dollar amount, not whether coverage applies.

Part D Settlement Checklist

1. Is the cause Collision or Other Than Collision?
2. Apply the lesser of ACV or repair cost.
3. Subtract the deductible.
4. If repair >= ACV, declare a total loss, pay ACV (plus tax/fees), and take salvage.
5. Add Transportation Expenses if a substitute vehicle is used.