7.1 Part D: Coverage for Damage to Your Auto

First-Party Coverage on the ISO PAP

Part D - Coverage for Damage to Your Auto is the physical-damage section of the ISO Personal Auto Policy (current edition PP 00 01 09 18). Unlike Parts A, B, and C, which respond to bodily injury and property damage involving other people, Part D is first-party coverage: it pays to repair or replace the insured's own covered auto regardless of who was at fault.

Part D is split into two distinct coverage grants, each typically carrying its own deductible on the Declarations page:

• Collision - direct and accidental loss caused by the covered auto upsetting (overturning) or impacting another vehicle or object.
• Other Than Collision (OTC) - also called Comprehensive; all other direct and accidental loss not produced by collision.

A crucial exam point: Part D coverage applies to "your covered auto" and to a "non-owned auto" the insured is using (a borrowed or rental vehicle). However, coverage for the non-owned auto is limited to the broadest physical-damage coverage carried on any one of the named insured's owned vehicles. If the insured carries collision on a sedan but only OTC on a pickup, a borrowed car gets collision and OTC.

Distinguishing Collision from Other Than Collision

Exam questions hinge on classifying a loss correctly because the deductibles differ and some perils are paid only under OTC. The ISO form defines collision and then lists specific OTC perils so there is no overlap.

Trap: Hitting an animal is the single most-tested classification. Many candidates assume any impact is collision, but striking a deer is Other Than Collision. If the driver swerves to avoid the deer and then hits a tree, that impact is collision. Read the fact pattern for what the car actually struck.

Glass note: The insured may elect to have glass breakage caused by a collision loss treated as a collision loss (one deductible for the whole event) instead of paying both deductibles.

Limit of Liability, ACV, and Deductibles

Part D's Limit of Liability provision caps the insurer's payment at 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 appropriate deductions for betterment where allowed. From that figure the policy subtracts the applicable deductible.

ACV is generally replacement cost minus depreciation. A 6-year-old vehicle is settled at its depreciated market value, not what a new one costs. This is why a heavily damaged older car is frequently declared a total loss (constructive total loss) when repair cost approaches or exceeds ACV.

Worked example - partial loss: A covered auto has an ACV of $18,000. A collision causes $7,500 in repairs. The collision deductible is $500.

• Lesser of ACV ($18,000) or repair cost ($7,500) = $7,500
• Less deductible $500 = insurer pays $7,000

Worked example - total loss: Same auto, ACV $18,000, repair estimate $19,200, deductible $500.

• Lesser of ACV ($18,000) or repair ($19,200) = $18,000 (ACV controls)
• Less deductible $500 = insurer pays $17,500

Notice the deductible is subtracted even on a total loss. Part D never pays more than ACV, so the policy can never be a source of profit. Coverage for a newly acquired auto is automatic, but the insured must report it - the form gives a default window (commonly 14 days, or 4 days if no physical-damage coverage exists yet, per the edition) for the new car to carry the broadest coverage already on the policy.

Transportation Expenses and Optional Extensions

Part D includes a modest Transportation Expenses grant. After a total theft of a covered auto, the insurer pays a limited per-day and per-occurrence amount (the ISO base is commonly $20 per day / $600 maximum) for substitute transportation, beginning 48 hours after the theft is reported. For non-theft OTC or collision losses, the same daily/aggregate cap applies but only if the Coverage for Damage to Your Auto is shown for that vehicle. Higher limits are available by endorsement.

Optional Part D extensions tested on the national exam:

• Towing and Labor Coverage (PP 03 03) - pays for disablement towing and on-site labor, up to a small per-disablement limit (e.g., $25-$75).
• Customizing Equipment / Special Equipment - aftermarket equipment must be specifically declared because the base form limits non-factory equipment coverage.
• Original Equipment Manufacturer (OEM) endorsement - requires repairs using OEM parts rather than aftermarket parts.

Key trap: Standard Part D contains no coverage for the gap between a vehicle's ACV and the loan/lease balance. A consumer who owes more than the car is worth needs separate GAP coverage, which is not part of the unendorsed PAP.