7.1 Part D Coverage for Damage to Your Auto (Collision, Other-Than-Collision)

Part D in the ISO Personal Auto Policy

Part D - Coverage for Damage to Your Auto is the first-party physical damage section of the ISO Personal Auto Policy (PAP, form PP 00 01). Unlike Part A liability, Part D pays the insured's own repair or replacement cost. It is optional coverage that a lender usually requires while a loan or lease is outstanding.

Part D divides physical damage into two perils: Collision and Other Than Collision (OTC), which the insurance industry also calls comprehensive. Each is purchased and rated separately, and each carries its own deductible shown on the Declarations page.

Defining Collision vs. Other Than Collision

The PAP defines Collision as the upset of your covered auto or non-owned auto, or its impact with another vehicle or object. A rollover, hitting a guardrail, or striking a parked car are all Collision losses.

Other Than Collision is defined by exception: it is any direct and accidental loss that is not Collision. The form lists examples so candidates can sort fact patterns quickly:

Trap: hitting a deer is Other Than Collision (contact with an animal), but swerving to avoid a deer and hitting a tree is Collision. The exam tests whether you classify by the contact, not the intent.

The Limit of Liability: ACV or repair cost, lesser of

The Part D Limit of Liability condition states the insurer pays 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 payment is then reduced by the deductible. ACV is generally replacement cost minus depreciation, so an older auto with a low market value caps the recovery even when repairs cost more.

Worked example

An insured carries Collision with a $500 deductible. The auto's ACV is $8,000. A covered collision causes $10,500 in repair estimates.

• Repair cost ($10,500) exceeds ACV ($8,000), so the auto is a total loss.
• The insurer pays the lesser figure, ACV = $8,000.
• Subtract the $500 deductible: $8,000 - $500 = $7,500 payable.

If instead repairs were $3,200 (under ACV), the insurer pays $3,200 - $500 = $2,700. The deductible reduces every covered loss.

Deductibles applied per loss and per coverage

Deductibles in Part D apply separately to each loss and separately to each coverage. If a single event triggers both Collision and Other Than Collision (rare), each deductible could apply. More commonly, an insured strikes a deer (OTC) and a week later slides into a pole (Collision); each loss bears its own deductible.

Many insurers offer a full glass / safety-glass option that waives the deductible for windshield repair, encouraging early repair before a crack spreads. Always read the Declarations to see which deductible applies to which coverage.

Covered autos, non-owned autos, and newly acquired autos

Part D follows the auto for several categories:

• Your covered auto shown on the Declarations.
• Newly acquired autos - an added or replacement vehicle is covered, but the insured must usually ask for Part D within a stated window (commonly 14 days, or 4 days if the policy has no Collision/OTC at all). Until then, broadest existing coverage may apply.
• Non-owned autos - a private passenger auto or trailer not owned by, and used by, the insured or a family member, including a temporary substitute while the covered auto is out of service for repair.

Trap: a non-owned auto furnished or available for regular use (such as a company car) is not covered under Part D. The exam tests the "regular use" exclusion frequently.

Transportation Expenses and Towing

Part D includes a small Transportation Expenses benefit. After a covered Other Than Collision theft of the whole auto (or any covered loss in some editions), the insurer pays for rental or other transportation, commonly $30 per day up to a $900 maximum (limits vary by edition; some current editions show $20/day, $600). For theft, a waiting period (often 48 hours) applies before benefits begin.

The optional Towing and Labor coverage pays towing and on-site labor up to a small per-disablement limit (e.g., $50 or $75) regardless of whether the auto is damaged.

How a total loss is settled

When repair cost meets or exceeds ACV, the insurer declares a total loss and pays ACV minus the deductible, then takes the salvage. The insured may sometimes retain salvage if the insurer deducts its value from the settlement.

ACV disputes are common, so insurers use market-value tools and comparable-sale data. The PAP does not provide replacement cost on the auto itself; depreciation always applies unless a separate new-car replacement or agreed-value endorsement is purchased. This is why a financed total loss can leave a gap between the loan balance and the ACV payout - the reason lenders or insureds add GAP (Guaranteed Asset Protection) coverage by endorsement or through the lender.

Loss-settlement summary table

Remember the order of operations on every Part D math question: (1) compare repair cost to ACV and take the lesser; (2) apply any sublimit; (3) subtract the deductible. Reversing those steps produces the most common wrong answer.