7.1 Part D - Coverage for Damage to Your Auto

Part D: First-Party Physical Damage on the PAP

Part D of the ISO Personal Auto Policy (PP 00 01 09 18 edition) is the first-party coverage that pays for physical damage to a covered auto. It is the section most heavily tested on the national P&C exam because it mixes coverage triggers, deductibles, exclusions, and actual cash value (ACV) math. Unlike Part A (Liability), Part D protects the insured's own vehicle regardless of fault, subject to the deductible shown on the declarations page.

Part D is split into two named perils: Collision and Other Than Collision (OTC, also called comprehensive). The exam expects you to classify a loss correctly because the deductibles usually differ and some causes are covered under only one of the two.

Collision vs. Other Than Collision

The policy defines collision as the upset of your covered auto or its impact with another vehicle or object. Everything else that is sudden and accidental is Other Than Collision. Memorize the OTC list - the exam loves to ask which peril applies.

A classic trap: striking a deer is OTC, but swerving to avoid the deer and hitting a tree is collision. Another trap: glass breakage caused by a collision may be paid as part of the collision loss so only one deductible applies.

Limit of liability and ACV settlement

The Part D limit 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 other property of like kind and quality. The PAP is an ACV (not replacement-cost) policy on the vehicle. ACV is generally replacement cost minus depreciation.

The insurer may, at its option, pay the loss in money or repair/replace the damaged property. If a repaired or replaced part results in betterment, that is not deducted under the unendorsed PP 00 01, but salvage belongs to the insurer when it pays a total loss.

Worked ACV and deductible problem

A covered auto is stolen and not recovered. Facts:

• Replacement cost of a comparable used vehicle: $24,000
• Accumulated depreciation: $6,000
• OTC (comprehensive) deductible: $500

Step 1 - ACV = replacement cost minus depreciation = $24,000 - $6,000 = $18,000. Step 2 - Limit is the lesser of ACV ($18,000) or repair/replace cost. Theft total loss, so $18,000. Step 3 - Subtract the deductible: $18,000 - $500 = $17,500 paid.

If the same vehicle had been damaged (not stolen) and repair estimates were $9,200 with a $500 collision deductible, the insurer pays $9,200 - $500 = $8,700, because the repair cost is less than ACV.

Transportation Expenses and additional benefits

Part D also provides up to $20 per day, $600 maximum for transportation expenses (rental/transportation) following a theft of a covered auto, beginning 48 hours after the theft and ending when the auto is returned or the loss is paid. For a non-theft OTC or collision loss to a covered auto that is disabled more than 24 hours, the same $20/$600 limit applies. Higher limits (e.g., $30/$900) can be elected and shown on the declarations.

Part D also covers loss to a non-owned auto (a private passenger vehicle, pickup, van, or trailer not owned by but in the custody of the insured) on the broadest physical-damage coverage applying to any owned auto.

Loss of Use, Towing, and the OEM-Parts Issue

Part D includes two practical add-ons the exam likes to isolate. Transportation expenses / loss of use pays a per-day amount (commonly $20/day, $600 maximum) for a rental after a theft of a covered auto (after a 48-hour waiting period) or, when the Coverage for Damage to Your Auto includes it, after a covered collision/OTC loss while the vehicle is being repaired. Towing and labor is a separate optional coverage that pays towing and on-site labor (the labor must be performed at the place of disablement).

A modern dispute the exam may reference is the use of aftermarket / non-OEM parts: the insurer may settle using parts of like kind and quality, and several states regulate disclosure of non-OEM parts. Settlement is still capped at the lesser of ACV or the cost to repair/replace with like kind and quality, minus the deductible. A total loss ends with the insurer paying ACV and taking the salvage.

Newly Acquired Autos and the Coverage-Following Rule

Part D follows the "your covered auto" definition, and newly acquired vehicles are a tested edge case. An additional auto acquired during the term is automatically covered, but the insured must ask the insurer to add it within a stated window (commonly 14 days) to keep the broadest coverage; a replacement auto inherits the coverage of the vehicle it replaces. Critically, if the insured carries no physical-damage coverage on any existing auto, a newly acquired auto gets collision/OTC only if reported within 4 days, often subject to a default deductible.

A temporary substitute vehicle (used while a covered auto is being serviced or repaired) is covered, but a vehicle furnished or available for regular use is excluded — the classic distractor where an employee regularly drives a company car.