7.1 Part D: Coverage for Damage to Your Auto

Part D Is First-Party Physical Damage Coverage

Part D - Coverage for Damage to Your Auto is the only part of the ISO Personal Auto Policy (form PP 00 01) that pays the insured for damage to the insured's own vehicle. Unlike Part A liability, which is third-party coverage, Part D is first-party coverage: the insurer pays the named insured (and the lienholder, if any) directly. Part D is optional - the insured chooses whether to buy it, and a lienholder or lessor almost always requires it as a condition of financing.

Part D divides physical damage into two perils, each purchased and deductibled separately:

Other Than Collision is also called comprehensive, but ISO calls it "Other Than Collision" on the form. The two coverages are independent: an insured may carry OTC without Collision (common on an older vehicle).

What Counts as Collision

Collision is defined narrowly: the upset of your covered auto or its impact with another vehicle or object. Hitting a guardrail, another car, a tree, or a parked vehicle is Collision. A rollover with no other contact is still Collision because upset is expressly included.

What Counts as Other Than Collision

Everything that is not collision or upset falls under Other Than Collision. The policy lists illustrative perils so candidates can sort losses correctly:

• Fire and explosion
• Theft or larceny of the vehicle
• Vandalism or malicious mischief
• Glass breakage (windshield, windows)
• Falling objects, missiles
• Windstorm, hail, water, flood
• Earthquake
• Contact with a bird or animal (the classic deer-strike example)
• Riot or civil commotion

High-frequency trap: Hitting a deer is Other Than Collision, but swerving to avoid the deer and striking a tree is Collision. The exam tests whether you classify the loss by what the auto actually contacted. Glass breakage is OTC; the insured may even elect a separate full glass (no-deductible) option.

The Loss Settlement Formula

The insurer's obligation under Part D is 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,

minus the applicable deductible. ACV is defined as replacement cost minus depreciation.

Worked Example - Repairable Loss

An insured backs into a pole (Collision). Repair estimate is $3,200; the car's ACV is $11,000; the Collision deductible is $500.

Worked Example - Total Loss / ACV

A five-year-old auto is stolen and never recovered (OTC). Original cost $30,000; current ACV is $14,000; OTC deductible $250.

The insured does not get the $30,000 purchase price - Part D pays ACV, never replacement cost, unless a special endorsement is added.

Transportation Expenses and Towing

Part D includes a built-in transportation expenses benefit. After a covered loss, the policy reimburses temporary transportation (rental car, ride-share, transit):

For a non-theft loss, the benefit begins when the auto is inoperable for more than 24 hours of repair time. These low default limits are commonly increased by endorsement (for example, $40/$1,200). Towing and Labor is a separate optional coverage (endorsement PP 03 03) that pays towing and on-site labor up to a scheduled amount per disablement.

Non-Owned Autos and the Broadest-Limit Rule

Part D extends physical damage coverage to a non-owned auto - a private passenger auto, pickup, van, or trailer the insured is driving that is not owned by or furnished for the regular use of the named insured or a family member. This includes a rental car on vacation.

Tested nuance: For a non-owned auto, Part D provides the broadest coverage applicable to any auto shown on the Declarations. So if the insured owns two cars - one with a $250 OTC / $500 Collision deductible and one with a $1,000 deductible - the rented vehicle gets the better (lowest) deductible of the scheduled autos. This is why an insured with Part D often does not need the rental company's expensive collision damage waiver.

Loss to a Lienholder

When the auto is financed or leased, the loss payable clause directs payment jointly to the insured and the lienholder/lessor named on the Declarations. The lienholder's interest is protected even if the insured's own claim would be denied for certain acts (for example, the insured's fraud), preserving the financing institution's security interest up to the balance owed.

Coverage Triggers Recap

• Collision = impact + upset of your auto.
• Other Than Collision = fire, theft, glass, weather, animal contact, vandalism - everything else.
• Payment = lesser of ACV or repair/replace cost, minus deductible.
• ACV = replacement cost - depreciation (not purchase price).

Mastering the Collision-versus-OTC line and the lesser-of settlement formula resolves the large majority of Part D exam questions.