7.1 Part D - Coverage for Damage to Your Auto

Part D Is First-Party Property 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 coverage: it pays to repair or replace the insured's own vehicle, regardless of fault. Contrast this with Part A Liability, which is third-party coverage paying for damage the insured causes to others' property.

Part D contains two separately purchasable coverages, each carrying its own deductible: Collision and Other Than Collision (commonly called Comprehensive). An insured can buy one, both, or neither - lienholders typically require both while the loan is outstanding.

The Two Perils Defined

• Collision - the upset (rollover) of your covered auto, or its impact with another vehicle or object. Hitting a guardrail, a parked car, or rolling the vehicle = Collision.
• Other Than Collision (OTC) - virtually every other direct and accidental loss. The PAP lists examples: fire, theft, larceny, explosion, earthquake, windstorm, hail, water, flood, malicious mischief or vandalism, riot or civil commotion, contact with a bird or animal, and breakage of glass.

The Classic Exam Trap: Animal Contact

Hitting a deer is OTC, not Collision - "contact with a bird or animal" is named in the OTC list. But if the driver swerves to avoid the deer and strikes a tree, that impact is Collision. Memorize this fact pattern; it appears on nearly every state exam.

How Part D Pays: ACV, the Limit, and Betterment

The insurer's obligation 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 to its pre-loss condition. ACV is generally defined as replacement cost minus depreciation. Note the PAP is not a stated-value or replacement-cost form by default - depreciation applies.

Worked ACV / Total-Loss Example

An insured's 6-year-old sedan is stolen. Replacement cost of an equivalent new vehicle is $32,000; the adjuster applies 55% depreciation, yielding an ACV of $14,400. The Collision deductible does not apply to theft (that is OTC), but the OTC deductible of $500 does.

• ACV: $14,400
• Less OTC deductible: -$500
• Insurer pays: $13,900

Worked Repair Example with Deductible

Driver backs into a pole. Repair estimate $3,200. Collision deductible $1,000.

• Repair cost: $3,200
• Less Collision deductible: -$1,000
• Insurer pays: $2,200

If the repair had cost $1,000 or less, the insurer would owe nothing - the deductible is the insured's retained share of every covered loss.

Additional Part D Benefits

• Transportation Expenses - up to $30/day, $900 maximum for a rented substitute auto after a theft of the covered auto (subject to a waiting period), or for temporary transportation/loss-of-use after any other covered loss. (These are the long-standing ISO sublimits; some carriers raise them by endorsement.)
• Towing and Labor - only if Coverage for Towing and Labor Costs (PP 03 03) is added; it pays disablement labor at the place of breakdown, commonly $25-$75 per disablement.
• Loss to a non-owned auto - Part D extends to a private passenger auto or trailer not owned by the insured while in the insured's custody, but only on the broadest Part D coverage applicable to any owned auto.

Deductible Mechanics and Glass Coverage

A deductible is the dollar amount the insured pays first on each loss. Higher deductibles lower premium because the insured retains more small-loss frequency. If both Collision and OTC apply to a single event - rare but possible - only the single applicable deductible is taken per coverage triggered.

Full Glass / Zero-Deductible Glass

Many carriers and several states offer full glass coverage (no deductible on windshield repair) by endorsement. Glass breakage is an OTC peril; whether a deductible applies depends on the endorsement, not the base form.

Diminishing Deductible and OEM Endorsements

• OEM Parts - the base PAP allows the insurer to use parts of like kind and quality, which can include aftermarket parts. An OEM endorsement guarantees original manufacturer parts.
• Newly Acquired Auto - automatically gets the broadest Part D coverage on any owned vehicle, but the insured must ask for OTC/Collision within the policy's notice window (commonly 14 days if no Part D existed on any auto, or 4 days if at least one auto already carried Part D - check the declarations edition).

Replacement vs. Additional Acquired Autos

A replacement vehicle automatically inherits the same Part D coverage the replaced auto carried; if that auto had no physical damage coverage, the insured generally has 14 days to request it. An additional acquired auto (a true increase in the fleet) is covered only if the insurer insures all owned autos, again subject to the notice rule. Exam questions love to test the difference between a replacement (broadest coverage flows automatically) and an additional auto (request required), so map each fact pattern to the correct window before answering.

Settlement Basis Recap

Remember the settlement formula in order: lesser of ACV or repair cost, minus the deductible. Skipping the ACV cap is the most common arithmetic mistake - a $40,000 repair on a $14,000 ACV vehicle is a total loss capped at $14,000.