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, provides first-party physical damage protection for the insured's own vehicle. Unlike Part A (Liability) and Part B (Medical Payments), Part D pays the insured directly regardless of fault. It is the most heavily claimed coverage on the policy and a frequent exam target. Part D is written into two distinct, separately purchased perils: Collision and Other Than Collision (OTC), sometimes labeled Comprehensive.

Collision Coverage

The PAP defines collision as the upset of your covered auto, or its impact with another vehicle or object. Examples include rolling the vehicle, hitting a guardrail, striking a pole, or colliding with another car. Collision pays even when the insured is at fault. It is the coverage triggered when you back into a fence or rear-end another driver. Collision is always written subject to a deductible the insured selects, commonly $250, $500, or $1,000.

Other Than Collision (Comprehensive)

Other Than Collision (OTC) covers direct and accidental loss from causes other than upset or impact. The PAP lists covered OTC perils, and the exam expects you to recognize them. Key triggers include:

• Fire, lightning, and explosion
• Theft or larceny of the auto
• Windstorm, hail, water, and flood
• Malicious mischief or vandalism
• Riot or civil commotion
• Falling objects and missiles
• Contact with a bird or animal (e.g., hitting a deer)
• Breakage of glass

Exam trap: Hitting a deer is OTC, not collision. But if a driver swerves to avoid a deer and strikes a tree, that loss is collision because it is an impact with an object. The cause-of-loss distinction drives which deductible applies.

Glass breakage may be claimed under either coverage; if claimed as OTC and bundled with another OTC loss, only one deductible applies. Many insurers waive the deductible on safety-glass repair when full-glass coverage is endorsed.

Limit of Liability and Actual Cash Value

The PAP caps the insurer's payment at the lesser of:

1. The actual cash value (ACV) of the stolen or damaged property, or
2. The amount necessary to repair or replace the property with other property of like kind and quality.

ACV is generally replacement cost minus depreciation. The policy is not a valued or stated-amount policy by default; it pays ACV. This is why older vehicles can be declared a total loss when repair cost approaches ACV.

Worked ACV and Deductible Example

A 2017 sedan is damaged in a covered collision. Replacement cost of a comparable vehicle is $24,000, and the adjuster applies 40% depreciation.

The insured absorbs the $500 deductible. If repair estimates exceeded $14,400, the insurer would total the vehicle and pay ACV less the deductible, taking the salvage.

Transportation Expenses and Towing

Part D also provides Transportation Expenses coverage: up to $20 per day, $600 maximum for a rental or transportation costs after a theft of the entire covered auto, beginning 48 hours after the theft. For non-theft OTC or collision losses, this rental benefit applies only when Transportation Expenses Coverage is endorsed. A separate Towing and Labor Coverage endorsement (PP 03 03) pays towing and on-site labor up to a chosen per-disablement limit (e.g., $25, $50, $75). These per-day and aggregate sublimits are common exam numerics, so memorize $20/$600 and the 48-hour theft trigger.

Transportation Expenses, Towing, and Settlement Options

Part D also provides two additional first-party benefits the exam tests:

The insurer's settlement options under Part D let it (1) pay to repair or replace the property, (2) pay the loss in money, or (3) return stolen property and pay for any damage. The insurer may keep all or part of the property at an agreed or appraised value.

Exam trap: Transportation-expense coverage for theft starts 48 hours after the theft is reported and continues until the auto is returned or the insurer pays the loss - it does not begin immediately. Part D physical damage is excess over a temporary substitute or non-owned auto's other coverage. A diminishing/total-loss decision turns on comparing repair cost to ACV; when repair approaches ACV, the insurer totals the vehicle and takes the salvage.

Deductible Interaction and Loss-of-Use Add-Ons

When both collision and OTC could apply to a single event, the cause of loss controls which deductible the insured pays. A single loss never triggers two deductibles, and glass losses combined with another OTC peril draw one OTC deductible. Insureds often select a higher OTC/collision deductible to reduce premium, accepting more first-dollar risk.

Exam tip: Part D pays the lesser of ACV or repair/replacement cost, then subtracts the chosen deductible. For a total loss, the insurer pays ACV less the deductible and takes the salvage. The optional Transportation/Rental Reimbursement endorsement provides a daily benefit during repairs, while the base policy provides rental only after a theft (starting 48 hours later). Knowing which trigger - theft vs. repair - activates rental coverage is a common distinction.