7.1 Part D: Coverage for Damage to Your Auto

What Part D Insures

Part D - Coverage for Damage to Your Auto is the first-party physical damage section of the ISO Personal Auto Policy (form PP 00 01). Unlike Parts A and C (which respond to your legal liability or another driver's failure to insure), Part D pays you for direct and accidental loss to your own covered auto, regardless of fault. It is optional coverage - the state mandates liability, not physical damage - but a lienholder almost always requires it while a loan or lease is outstanding.

Part D is built from two distinct insuring agreements that are purchased and rated separately:

• Collision - the upset (overturn) of your covered auto or its impact with another vehicle or object.
• Other Than Collision (OTC), marketed as Comprehensive - every other covered cause of loss.

Each coverage carries its own deductible, and a single event triggers only one of them. A driver who hits a deer files an OTC claim; a driver who swerves to miss the deer and strikes a guardrail files a Collision claim. Exam questions love this fork.

Collision vs. Other Than Collision

The policy defines Collision narrowly: the upset of your auto or its impact with another vehicle or object. Everything that is not collision is OTC. The PAP lists OTC examples so candidates can sort losses quickly.

Trap: glass breakage caused by a collision may, at the insured's option, be considered a Collision loss so only one deductible applies. Many insurers waive the deductible entirely for windshield repair under OTC - know that this is a coverage feature, not a policy definition.

How Much Part D Pays: ACV and the Deductible

The core limit-of-liability rule in Part D is that 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 like kind and quality,

minus the deductible shown on the Declarations. ACV = Replacement Cost - Depreciation. Because autos depreciate steadily, the ACV ceiling means a total loss is paid at market value, not what the owner originally paid.

Worked total-loss example

An insured's three-year-old sedan is stolen and never recovered. The car's replacement cost today is $32,000, but accumulated depreciation is $14,000, so ACV = $18,000. The OTC deductible is $500.

• Payment = ACV $18,000 - deductible $500 = $17,500.

Worked repair example

The same insured backs into a pillar (Collision, $1,000 deductible). The body shop estimate is $4,200, and the car's ACV is $18,000. Repair cost ($4,200) is less than ACV, so the repair figure governs.

• Payment = $4,200 - $1,000 deductible = $3,200.

Notice the deductible applies per occurrence, not per year. A driver with two separate Collision claims pays the deductible twice.

Transportation Expense and Loss-of-Use

When a covered Part D loss takes the auto out of service, the Transportation Expenses provision reimburses substitute transportation (a rental car) and any loss-of-use charges a rental agency imposes on the insured. The unendorsed default limits are $30 per day, up to a maximum of $900.

A critical exam detail is the 48-hour waiting period that applies only to theft. If the entire auto is stolen, transportation expense begins 48 hours after the theft is reported and runs until the auto is returned to use or the insurer pays for the loss. For all other OTC and Collision losses, the coverage applies only if the Declarations show that physical damage coverage is in force, and there is no waiting period.

Higher transportation limits can be purchased; the agent should advise insureds whose realistic rental cost exceeds $30 per day.

Covered Autos Under Part D: Newly Acquired and Non-Owned

Part D follows the policy's broader definitions of your covered auto, but with two physical-damage wrinkles tested heavily:

• Newly acquired auto. A newly acquired vehicle automatically receives the broadest physical damage coverage already on any auto on the policy. If at least one existing auto carries both Collision and OTC, the new auto gets both - but the insured must request that coverage within the policy's reporting window (commonly 14 days, or 4 days when the policy carries no physical damage on any auto). If no auto on the policy currently has physical damage, a newly acquired auto receives Collision/OTC only if reported within 4 days, subject to a default $500 deductible.
• Non-owned auto. A private passenger auto, pickup, van, or trailer not owned by or furnished for the regular use of the insured, while in the custody of or being operated by the insured, is covered for physical damage - but again only to the level of the broadest coverage on the policy.

Trap: a vehicle furnished or available for the regular use of the insured (such as a company car or a long-term loaner) is not a non-owned auto and is excluded from Part D unless separately scheduled.