Part D: Physical Damage (Collision & Other-Than-Collision)

Part D: Coverage for Damage to Your Auto

Part D insures direct and accidental physical damage to a covered auto. It is written in two coverages, and the exam expects you to classify a given loss into the right one because they carry separate deductibles.

Collision vs. Other-Than-Collision

Collision is the upset (overturn) of the covered auto or its impact with another vehicle or object. Other than collision (OTC), often called comprehensive, covers virtually every other direct, accidental loss: fire, theft, explosion, windstorm, hail, flood, falling objects, vandalism, glass breakage, and contact with a bird or animal. Hitting a deer is OTC, not collision, a favorite exam point, because the impact is with an animal, while swerving and hitting a tree to avoid the deer would be collision.

Each coverage carries its own deductible, and OTC deductibles are often lower than collision deductibles.

How Part D Pays

Part D pays the lesser of the actual cash value of the stolen or damaged property or the amount necessary to repair or replace it, minus the deductible. Because the standard PAP pays ACV, a totaled vehicle is settled at its depreciated value, not the original purchase price, which is why gap coverage (paying the difference between ACV and a loan balance) is sold for financed cars. The exam tests that the PAP physical-damage settlement is ACV-based and that a loan deficiency is not covered without a gap endorsement.

Transportation Expenses and Rental

Part D includes a modest transportation expenses coverage: if the covered auto is stolen, the policy pays a limited daily amount for substitute transportation after a waiting period, up to a maximum. Higher rental reimbursement can be purchased by endorsement. This coverage is small and capped, and the exam may test the waiting period and per-day cap.

Part D Exclusions

Part D excludes several losses: damage from wear and tear, freezing, mechanical or electrical breakdown, and road damage to tires (unless caused by a covered peril); loss to certain electronic equipment and media not permanently installed (with limited carve-backs); loss to a vehicle used as a public or livery conveyance; damage due to war, nuclear hazard, or radioactive contamination; and loss to a non-owned auto used without a reasonable belief of permission. Damage from racing or speed contests is also excluded.

Many of these mirror the property-insurance principle that maintenance and inevitable deterioration are not fortuitous and therefore not insurable. When a Part D scenario appears, first classify the cause as collision or OTC, then confirm no exclusion applies, then apply the ACV-versus-repair-cost rule and subtract the correct deductible, which is the disciplined sequence the exam rewards for physical-damage questions.

Classifying and Settling Physical-Damage Claims

Part D physical damage is tested by classifying the cause and applying the right deductible. Collision is the impact of the covered auto with another vehicle or object, or its overturn. Other than collision (comprehensive) covers virtually everything else: theft, fire, explosion, windstorm, hail, flood, falling objects, vandalism, glass breakage, and contact with a bird or animal. Hitting a deer is OTC; swerving to avoid the deer and striking a tree is collision. Each coverage carries its own deductible, and OTC deductibles are often lower.

Part D pays the lesser of the actual cash value or the cost to repair or replace, minus the deductible. Because settlement is ACV-based, a totaled financed car pays its depreciated value, which may fall short of the loan balance, leaving a deficiency unless gap coverage is added.

Part D also includes a modest transportation expenses coverage for a stolen covered auto (a limited daily amount after a waiting period), and rental reimbursement can be endorsed. The exclusions track the maintenance-is-not-fortuitous principle: wear and tear, mechanical or electrical breakdown, freezing, and road damage to tires (unless from a covered peril) are excluded, as are losses while the auto is used for livery, during racing, or from war or nuclear hazard.

When a Part D scenario appears, classify the cause as collision or OTC, confirm no exclusion applies, then apply the ACV-versus-repair-cost rule and subtract the correct deductible.

Classify the cause first: impact with a vehicle or object, or overturn, is collision, while theft, fire, hail, flood, glass, and animal strikes are other-than-collision, each with its own deductible (OTC deductibles are often lower). Hitting a deer is OTC; swerving and hitting a tree is collision. Part D pays the lesser of ACV or repair cost minus the deductible, so a totaled financed car settles at depreciated value and may leave a loan deficiency unless gap coverage is added. Wear and tear, mechanical breakdown, freezing, racing, and livery use are excluded.