5.5 Part D: Physical Damage Coverage

First-Party Coverage for Your Own Car

Part D — Coverage for Damage to Your Auto is first-party protection: it pays to repair or replace your vehicle. (Part A pays for damage you cause to others' property; Part D pays for your property.) Part D has two coverages an insured can buy separately, each with its own deductible.

1. Collision

Collision is the upset (overturn) of your covered auto or its impact with another vehicle or object. Collision pays regardless of fault — if you are at fault, your own Collision still repairs your car (the deductible applies, and the insurer may subrogate against an at-fault third party).

Examples: striking another car, hitting a guardrail, tree, or building, backing into a pole, pothole damage, and rolling the vehicle.

2. Other Than Collision (Comprehensive)

Other Than Collision (OTC), also called Comprehensive, covers physical damage from causes other than collision:

Exam alert: hitting an animal (deer, dog) is Other Than Collision, not Collision. Swerving to avoid a deer and hitting a tree, however, IS Collision — the loss is the impact with the tree.

Collision vs. OTC Quick Reference

How Part D Settles a Claim

The insurer pays the lesser of:

• the vehicle's Actual Cash Value (ACV), or
• the cost to repair or replace the property,

minus the deductible. ACV = replacement cost − depreciation.

Partial loss: repair $5,000; ACV $15,000; deductible $500 → pays $4,500 (repair is the lesser figure, minus the deductible).

Total loss: repair $12,000; ACV $10,000; deductible $500 → pays $9,500 (ACV is the lesser figure, minus the deductible). When repair cost meets or exceeds ACV, the insurer declares a total loss, pays ACV less deductible, and takes the salvage.

Deductibles

A higher deductible lowers the premium because the insured retains more of the small, frequent losses.

Transportation Expense and Gap

Part D includes Transportation Expenses — a per-day amount up to a stated maximum (commonly $20–$30 per day, up to about $600 total) for substitute transportation after a covered theft or other loss, often subject to a waiting period for theft. Gap exposure is the shortfall when the loan balance exceeds ACV (owe $25,000, ACV $20,000 = $5,000 gap); standard Part D does not pay gap — a separate loan/lease gap endorsement or coverage is required.

Part D Exclusions

Non-Owned and Borrowed Vehicles

Part D extends to a non-owned auto the named insured or a family member is operating, but only at the broadest physical damage coverage already on the policy — and never to a vehicle furnished for the insured's regular use. This is the basis for the often-misunderstood rental-car answer: if the insured carries Collision and OTC on the personal car, that coverage typically follows to a short-term rental, subject to the policy deductible.

Many travelers nonetheless buy the rental company's collision damage waiver to avoid a deductible and loss-of-use disputes, but on the exam the default is that the insured's own Part D follows to a temporary non-owned auto.

Diminished Value and Loss of Use

Two limits surprise candidates. First, the standard PAP does not pay diminished value — the loss in resale value of a repaired vehicle — for the insured's own first-party claim; it pays the lesser of ACV or repair cost. Second, Part D's transportation/loss-of-use benefit is capped at a modest per-day amount with an overall maximum, not the full cost of an extended rental. An insured who wants a generous rental allowance should add a rental reimbursement endorsement with a higher daily limit, because the built-in transportation expense is intentionally small.

Total Loss Settlement Mechanics

When a vehicle is a total loss, the insurer establishes ACV using comparable-vehicle valuation tools, market listings, and condition adjustments. The insured receives ACV minus the deductible, plus, in most states, applicable sales tax and title/registration fees so the insured can buy a comparable replacement. The insurer takes the salvage and may sell it to offset the loss. If the insured disputes the ACV, the PAP's appraisal provision lets each side hire an appraiser and, if they disagree, an umpire decides — a Part F mechanism worth remembering for total-loss disputes.

Stated Endorsements That Expand Part D

Tip: Part D follows the vehicle, not the driver — it covers your covered auto, temporary substitutes, and (within limits) a non-owned auto you are operating, but routinely excludes loss to a vehicle you use regularly that is not on the policy.