7.1 Part D - Coverage for Damage to Your Auto

Part D Is First-Party, Optional Coverage

Part D - Coverage for Damage to Your Auto of the ISO Personal Auto Policy (current edition PP 00 01 09 18) 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' property. Part D is optional - a policy can be issued with liability only - but a lienholder almost always requires it, and it is named as a loss payee on the declarations.

Part D is built from two separately purchased coverages, each with its own deductible:

Both coverages pay regardless of fault, which is the key first-party feature exam writers test.

Collision Defined

The policy defines Collision as the upset (overturn) of your covered auto or its impact with another vehicle or object. Collision pays even when you are at fault - your own insurer repairs your car (less the deductible) and then may subrogate against a negligent third party to recover the payout and your deductible.

Classic collision losses: striking another vehicle, hitting a guardrail, tree, building, or pole, backing into an object, pothole damage, and rolling the vehicle. Note that upset alone (a single-car rollover with no impact) is still Collision.

Other Than Collision (Comprehensive)

Other Than Collision (OTC) - branded Comprehensive in most carriers' marketing - covers direct and accidental physical loss from causes other than collision. It is written on an open-perils (all-risk) basis: everything is covered unless excluded. The policy lists examples so the line between Collision and OTC is unmistakable on the exam:

The #1 trap: hitting a deer (or any animal) is Other Than Collision, NOT Collision - even though it feels like an impact. But swerving to avoid a deer and hitting a tree is Collision, because the loss-producing event was the impact with the tree.

Glass breakage is OTC; many insurers waive the deductible on windshield-only glass claims. The insured may also choose to apply a single deductible to a glass loss under Collision when the glass breaks in a covered collision - the policy lets the insured pick the option more favorable to them, but a loss is never paid twice.

How Much Part D Pays: ACV and the Deductible

The limit of liability for Part D is 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 property of like kind and quality,

minus the deductible that applies to that coverage.

ACV = replacement cost minus depreciation. The PAP is an ACV (not replacement-cost) policy unless an endorsement says otherwise, so a totaled older car is paid at its depreciated market value, not what a new car costs.

Worked Numeric - Total Loss

A 7-year-old sedan is stolen. Facts:

• Replacement cost of a comparable new car: $32,000
• Depreciation: 60%
• OTC (Comprehensive) deductible: $500

Step 1 - ACV = $32,000 x (1 - 0.60) = $12,800. Step 2 - Subtract the deductible: $12,800 - $500 = $12,300 paid.

Because theft is OTC, the Comprehensive deductible applies, not the Collision deductible. If the same car had instead been wrecked at fault, the Collision deductible would apply.

Worked Numeric - Repairable Loss

A covered collision causes $4,200 in damage to a car whose ACV is $18,000; the Collision deductible is $1,000. The insurer pays the lesser of ACV ($18,000) or repair cost ($4,200), minus the deductible: $4,200 - $1,000 = $3,200. The insured pays the first $1,000 out of pocket.

Transportation Expenses

Part D includes a small built-in Transportation Expenses allowance (commonly $20 per day / $600 maximum) for a rental car after a theft of the entire covered auto (and, for other covered losses, when the insurer's repair time exceeds a stated waiting period). Higher rental reimbursement requires the Extended Transportation Expenses endorsement.

What Counts as a Covered Auto and Newly Acquired Autos

Part D follows the policy's definition of "your covered auto": vehicles shown on the declarations, certain trailers, a temporary substitute auto used while a covered auto is out of service, and a newly acquired auto.

If the new car is an additional vehicle, the broadest physical-damage coverage on any owned auto applies and the insured generally has 14 days to report it. If the new car replaces an existing vehicle, it carries the same Part D coverage as the car it replaced - but if the old car had no physical-damage coverage, the insured must ask for it within 4 days to get OTC/Collision on the replacement. These 14-day and 4-day windows are a frequent exam point.

Salvage

After paying a total loss, the insurer takes the salvage (the wrecked vehicle) and may sell it, because paying ACV and also letting the insured keep the wreck would exceed the policy's indemnity principle.