7.1 Part D Coverage for Damage to Your Auto

Part D: First-Party Physical Damage

Part D — Coverage for Damage to Your Auto of the ISO Personal Auto Policy (form PP 00 01 09 18) is the first-party property section. It pays the insured for direct and accidental physical loss to a covered auto or non-owned auto, regardless of fault. Part D is optional on the policy: an insured can buy liability (Part A) and skip Part D entirely. Because financing or leasing almost always requires it, however, Part D appears on most personal auto policies and is heavily tested.

Part D splits physical damage into two named coverages: Collision and Other Than Collision (OTC), sometimes called Comprehensive. The exam expects you to classify a loss correctly, because the deductible, and sometimes whether coverage exists at all, depends on the bucket.

Collision Coverage

Collision is the upset of a covered auto or its impact with another vehicle or object. The two operative words are upset (overturning) and impact. A vehicle that rolls into a ditch, strikes a guardrail, hits a deer-crossing sign, or collides with another car has a Collision loss.

• Striking a parked car, pole, tree, or building = Collision
• Rolling/overturning (upset), even with no other object = Collision
• Pothole impact damaging a rim or suspension = Collision

Collision always carries a deductible (the insurer pays the loss minus the deductible). Common deductibles run $250, $500, or $1,000. The higher the deductible, the lower the premium, because the insured retains more of each loss.

Other Than Collision (Comprehensive)

Other Than Collision covers nearly every other cause of direct and accidental loss. The PAP lists examples that the exam loves to quiz:

Classic trap: hitting a deer is OTC, but if the driver swerves to avoid the deer and hits a tree, the resulting loss is Collision. The same animal produces two different classifications depending on what the car actually struck.

Glass breakage may be claimed as either Collision or OTC; the PAP lets the insured elect OTC so the glass loss is not charged against a collision deductible. Many insurers offer full glass coverage (no deductible) by endorsement.

How Much Part D Pays: ACV and the LKQ Limit

The PAP limits the insurer's payment to 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 (LKQ).

ACV is replacement cost minus depreciation. The auto's age, mileage, and condition drive the depreciated value. Part D is not a stated-value or agreed-value policy unless an endorsement says so; the basic form pays ACV at the time of loss.

Worked numeric — ACV settlement

A 6-year-old sedan is destroyed by fire. Replacement cost of a comparable used vehicle is $14,000; depreciation is $5,500; the OTC deductible is $500.

• ACV = $14,000 − $5,500 = $8,500
• Insurer pays = ACV − deductible = $8,500 − $500 = $8,000

Worked numeric — repair vs. ACV

A hailstorm (OTC) dents a car. Repair estimate is $4,200; the car's ACV is $6,000; the deductible is $500. Because repair cost ($4,200) is less than ACV ($6,000), the insurer pays the lesser figure: $4,200 − $500 = $3,700. When repair cost approaches or exceeds ACV, the insurer declares a total loss and pays ACV minus the deductible instead.

Sublimits, Transportation Expense, and Towing

The unendorsed PAP includes two small benefits inside Part D:

• Transportation Expenses: if the covered auto is stolen, the policy pays a daily rental/transportation allowance (commonly $20 per day, $600 maximum) for a theft loss. Coverage starts 48 hours after the theft and ends when the auto is returned or the insurer pays for the loss. (Higher limits and broader "loss of use for any covered loss" apply only when the Extended Transportation Expenses endorsement, PP 03 02, is added.)
• Towing and Labor: available only by endorsement (PP 03 03), this pays towing and on-site labor up to a small per-disablement limit (e.g., $25, $50, $75, or $100).

Electronic equipment not permanently installed, custom furnishings, and tapes/records are limited or excluded unless scheduled — covered next in 7.2.

Transportation Expense, Loss Settlement, and the OTC/Collision Line

Part D includes a built-in Transportation Expenses provision that pays a small daily amount (commonly $30 per day, $900 maximum) for a rental car or other transportation. After a theft of the entire covered auto, the benefit begins 48 hours after the theft is reported; after any other Part D loss it begins when the auto is undriveable for more than 24 hours. Candidates should know both the daily cap and the theft-specific 48-hour trigger because exam stems test both.

Loss settlement on Part D is actual cash value or the cost to repair or replace with like kind and quality, whichever is less, minus the deductible — the policy never owes more than ACV, so a totaled older car pays its depreciated market value, not the cost of a new one. The single most tested classification rule is the hitting-an-animal line: striking a deer is Other Than Collision, while swerving to avoid the deer and hitting a tree is Collision. Glass breakage, falling objects, vandalism, flood, and fire are all OTC; impact and upset are Collision.

Misrouting the cause changes which deductible applies and is the classic Part D trap.