9.4 BAP Physical Damage Coverage
Key Takeaways
- BAP Physical Damage is FIRST-PARTY coverage on the insured's own covered autos and offers three options: comprehensive, collision, and specified causes of loss.
- Comprehensive covers all direct loss EXCEPT collision and a few exclusions (it pays theft, fire, hail, flood, vandalism, glass, and animal strikes).
- Collision means impact with another object or overturn; hitting an animal is COMPREHENSIVE, not collision.
- Specified causes of loss is a named-peril, lower-cost option (fire, lightning, explosion, theft, windstorm/hail, earthquake, flood, mischief, sinking/derailment) that excludes collision and falling-object damage.
- Standard transportation-expense (rental) reimbursement is $20/day up to $600 per loss, payable only when a covered auto is stolen; valuation is Actual Cash Value (ACV) unless a Stated Amount endorsement applies.
First-Party Coverage
Physical Damage (Section III) is first-party coverage — it pays for direct and accidental loss to the insured's own covered auto, regardless of fault. It is written using the physical-damage symbols (usually 7 or 2) and each coverage carries a deductible.
The Three Options
Comprehensive (Other Than Collision)
Comprehensive is the broadest physical-damage option. It pays for any direct loss EXCEPT collision and the policy's stated exclusions. Covered causes include theft, fire, explosion, hail, windstorm, flood, falling objects, vandalism, glass breakage, and contact with a bird or animal.
Collision
Collision means the upset (overturn) of a covered auto or its impact with another vehicle or object. Examples: striking a guardrail, rear-ending a car, rolling over. Collision typically carries a higher deductible because losses are frequent.
Specified Causes of Loss
A named-peril option costing less than comprehensive. It covers only: fire, lightning, explosion, theft, windstorm, hail, earthquake, flood, mischief or vandalism, and the sinking, burning, collision, or derailment of a conveyance transporting the auto. It does NOT cover collision of the auto itself, glass-only breakage, or falling/flying objects (those are comprehensive).
| Peril | Comprehensive | Collision | Specified Causes |
|---|---|---|---|
| Theft | ✓ | ✗ | ✓ |
| Fire | ✓ | ✗ | ✓ |
| Hail/Windstorm | ✓ | ✗ | ✓ |
| Flood | ✓ | ✗ | ✓ |
| Vandalism | ✓ | ✗ | ✓ |
| Glass breakage | ✓ | ✗ | ✗ |
| Falling object | ✓ | ✗ | ✗ |
| Animal strike (deer) | ✓ | ✗ | ✗ |
| Vehicle overturn/impact | ✗ | ✓ | ✗ |
| Relative premium | Medium | Highest | Lowest |
Classic trap: A deer running into the car is comprehensive; swerving and hitting a tree to avoid the deer is collision.
Additional Coverages
| Coverage | Limit | Trigger |
|---|---|---|
| Transportation Expenses | $20/day, $600 maximum | Only after THEFT of a covered private passenger auto; begins 48 hours after the theft |
| Glass repair option | Deductible may be waived | Repair rather than replace |
| Towing (if endorsed) | Scheduled amount | Disablement |
Valuation and the Limit of Insurance
The insurer pays the lesser of the Actual Cash Value (ACV) of the auto or the cost to repair/replace with like kind and quality, minus the deductible.
| Method | How It Pays |
|---|---|
| Actual Cash Value (ACV) | Replacement cost minus depreciation (default) |
| Stated Amount | Lesser of stated amount, ACV, or repair cost — caps payout, common on older/specialty rigs |
| Agreed Value / RC | By endorsement on select units |
Worked ACV Example
A box truck with a replacement cost of $40,000 has depreciated 45 percent. The deductible is $1,000.
- ACV = $40,000 × (1 − 0.45) = $22,000
- Less deductible: $22,000 − $1,000 = $21,000 paid
Exclusions
| Exclusion | Detail |
|---|---|
| Wear and tear, freezing, mechanical breakdown | Maintenance-type losses |
| Blowouts/road damage to tires | Unless other covered loss also occurs |
| War and nuclear hazard | Standard catastrophe exclusions |
| Electronic equipment not permanently installed | Unless scheduled |
| Diminution in value | Loss of resale value after repair |
Hired-Auto Physical Damage
For rented vehicles (Symbol 8), the Hired Auto Physical Damage endorsement can pay on a primary or excess basis and may reimburse the rental company's collision damage waiver (CDW) charge — useful for businesses that frequently rent.
How a Total Loss vs. Repairable Loss Is Settled
The insurer chooses, at its option, to either pay for the loss in money or repair/replace the damaged auto. On a repairable loss, the carrier pays the cost to restore the vehicle with like kind and quality less the deductible. On a total loss, it pays ACV (or the stated/agreed amount) less the deductible, and the salvage transfers to the insurer.
| Loss Type | Settlement |
|---|---|
| Repairable | Cost to repair − deductible |
| Total loss | Lesser of ACV / stated amount / repair cost − deductible; insurer takes salvage |
| Glass-only | May waive deductible if repaired rather than replaced |
Deductible Mechanics
The deductible applies per covered auto, per occurrence. If a hailstorm damages five owned trucks, five deductibles apply because each auto is a separate loss. If a single truck suffers both comprehensive and collision damage in one accident, only the larger of the two deductibles is subtracted. Comprehensive deductibles are usually lower than collision deductibles because comprehensive losses (glass, theft) tend to be smaller and the insurer wants the insured to report them.
Worked Multi-Vehicle Example
A tornado damages three scheduled vans, each insured for comprehensive with a $500 deductible. Repair estimates are $4,000, $6,000, and $9,500.
- Van 1: $4,000 − $500 = $3,500
- Van 2: $6,000 − $500 = $5,500
- Van 3: $9,500 − $500 = $9,000
- Total paid: $18,000 (three separate deductibles, one per auto).
This is a frequent exam item — students wrongly apply a single deductible to the whole storm. The BAP treats each covered auto as its own loss.
Coverage Extensions and Limitations
- Audio/visual and electronic equipment permanently installed is covered; portable or non-installed gear (radar detectors, removable GPS) is excluded unless scheduled.
- Custom-furnishing/equipment caps can apply to vans/trucks with added equipment.
- Diminution in value (lost resale value after a quality repair) is expressly excluded, a fact tested against the intuition that 'the car is worth less now, so they must pay.'
A company van strikes a deer that darts into the road, denting the hood. Which physical damage coverage responds?
Under standard BAP Physical Damage, what is the transportation-expense (rental reimbursement) limit and what triggers it?
A covered truck has a replacement cost of $40,000, has depreciated 45 percent, and carries a $1,000 deductible. Using ACV, how much does the insurer pay on a total loss?