7.1 Part D — Coverage for Damage to Your Auto

Part D in the ISO Personal Auto Policy

The ISO Personal Auto Policy (PAP, form PP 00 01, current 09 18 edition) organizes coverage into lettered parts. Parts A through C handle liability, medical payments, and uninsured/underinsured motorists. Part D — Coverage for Damage to Your Auto is the first-party physical-damage section. It pays the insured for damage to the covered auto regardless of fault, subject to a deductible. Unlike liability, Part D is optional and is usually required only when a lender or lessor holds an interest in the vehicle.

Part D contains two distinct coverages: Collision and Other Than Collision (OTC). The insured selects each separately on the declarations, and each carries its own deductible. A vehicle can be insured for OTC only, but a lender will normally require both.

Collision coverage

The PAP defines collision as the upset of the covered auto or its impact with another vehicle or object. The trigger is the impact or rollover itself, not who was at fault. Hitting a guardrail, striking a tree, sideswiping a parked car, or rolling the vehicle in a ditch are all collision losses.

Because collision pays no matter who caused the crash, an at-fault insured collects under Part D and the carrier then pursues the other driver through subrogation when someone else was liable. After a successful subrogation recovery, the insurer refunds the insured's deductible on a pro-rata basis before keeping the balance. Collision is the more expensive of the two coverages because driver-caused impacts are frequent.

Other Than Collision (Comprehensive)

Other Than Collision, often marketed as comprehensive, covers virtually every direct and accidental loss that is not collision or upset. The PAP lists examples so the dividing line is clear on the exam:

Exam trap: a deer strike is OTC, not collision, even though the car hits the animal — animal contact is specifically carved out of the collision definition. Glass breakage may be claimed under either coverage, but it is treated as OTC when not caused by an impact loss.

Loss settlement — ACV and limit of liability

Part D pays the lower of the actual cash value (ACV) of the stolen or damaged property or the amount needed to repair or replace it with like kind and quality. ACV equals replacement cost minus depreciation. The PAP does not pay replacement cost on the vehicle itself; betterment-style depreciation applies.

Worked example: a five-year-old sedan with replacement cost $26,000 has depreciated 40%. ACV = $26,000 − ($26,000 × 0.40) = $15,600. With a $500 collision deductible on a total loss, the insurer pays $15,600 − $500 = $15,100.

If the repair estimate were only $9,000 on the same car, the insurer pays the lower repair figure minus the deductible: $9,000 − $500 = $8,500, because the auto is not a total loss.

Transportation Expenses and supplementary features

Part D automatically provides Transportation Expenses: up to $30 per day, $900 maximum for a rental or transportation costs after a covered theft of the entire vehicle (a 48-hour waiting period applies to theft), and the same sublimit for loss of use following any other covered Part D loss. Higher limits can be endorsed.

The PAP also limits non-OEM custom equipment and electronic equipment unless described or endorsed, and includes a small allowance ($1,500 in the 09 18 form) for electronic equipment not installed by the manufacturer. Diminution in value is excluded — the policy will not pay for a vehicle's reduced resale value after a properly completed repair.

Collision vs. Other-Than-Collision and Transportation Expense

Part D splits physical damage into two perils. Collision is the upset of, or impact with, another vehicle or object. Other-than-collision (comprehensive) covers virtually everything else — fire, theft, vandalism, flood, hail, falling objects, contact with a bird or animal, and glass breakage. Hitting a deer is comprehensive, not collision — a classic exam point. Part D also includes transportation expenses (rental reimbursement, often ~$20/day up to $600) beginning after a theft-related waiting period or while a damaged covered auto is being repaired.

Newly Acquired Autos and Loss Settlement

Physical damage on a newly acquired auto carries automatically only if the insured already has Part D on at least one vehicle and reports the new car within the grace period (typically 14 days). Loss settlement under Part D is the lesser of the ACV of the damaged property or the amount needed to repair or replace, minus the deductible. The deductible applies per loss; a separate, often lower, deductible may apply to glass. Betterment and depreciation can reduce a parts payment to ACV.