7.1 Part D: Coverage for Damage to Your Auto

Part D - Coverage for Damage to Your Auto

Part D of the ISO Personal Auto Policy (current edition PP 00 01 09 18) insures the policyholder's own vehicle against physical damage. It is first-party coverage: the insurer pays the named insured regardless of who caused the loss, then may pursue subrogation against an at-fault third party. Unlike Part A (Liability) and Part B (Medical Payments), Part D is optional in most states and is required only when a lienholder or lessor demands it.

Part D contains two distinct coverages, each purchased separately and each subject to its own deductible: Collision and Other Than Collision (Comprehensive). A vehicle can carry one, both, or neither. Lenders almost always require both.

Collision vs. Other Than Collision (Comprehensive)

The policy defines Collision as the upset of your covered auto or non-owned auto, or its impact with another vehicle or object. Everything else that causes direct and accidental loss is Other Than Collision (OTC), which the policy lists by example.

Trap: A deer strike is OTC, not Collision — striking an animal is specifically carved out of the collision definition. Hitting a guardrail to avoid a deer, however, is Collision. Examiners test this distinction routinely.

Limit of Liability and Actual Cash Value

The Part D limit 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. The PAP is an ACV (not replacement-cost) policy unless a personal-auto replacement-cost or new-car endorsement is added.

ACV is generally computed as replacement cost minus depreciation. Worked example: a 6-year-old sedan with a $28,000 replacement cost and accumulated depreciation of $16,500 has an ACV of $28,000 − $16,500 = $11,500. If repair estimates exceed roughly 70-75% of ACV, the insurer declares a total loss and pays ACV, taking the salvage.

How the Deductible Works (Worked Numeric)

Each coverage has its own deductible, subtracted from the loss payment after ACV is determined.

• Covered repair cost: $6,200
• Collision deductible: $500
• Insurer pays: $6,200 − $500 = $5,700

If the same insured also has an OTC loss the same week (cracked windshield, $900 with a $100 OTC deductible), that is a separate claim under a separate deductible — insurer pays $800. Deductibles do not combine across the two coverages.

Many states require full glass (zero-deductible windshield) options under OTC. The policy also provides Transportation Expenses — typically $30/day, $900 maximum in the base form — for a covered theft of the entire auto (after a 48-hour waiting period) or for any other Part D loss while the auto is being repaired.

Part D - Coverage for Damage to Your Auto

Part D is the physical damage section, paying for direct and accidental loss to the insured's covered auto and non-owned autos, minus the deductible. It splits into two coverages:

A heavily tested distinction: hitting an animal (e.g., a deer) is OTC/Comprehensive, not Collision, even though impact occurs. Glass breakage is usually OTC, and many policies waive the deductible for windshield repair.

Deductibles and Settlement

Physical damage is settled at ACV (or repair cost) up to the deductible-reduced amount; the deductible applies per occurrence. Transportation expenses (rental reimbursement) of about $30/day, $900 max apply after a covered theft (often a 48-hour waiting period for theft). A separate Towing and Labor endorsement may be added.

Non-Owned and Newly Acquired Autos

Part D extends to a non-owned auto the insured operates (rental cars, borrowed cars) at the broadest coverage on any owned auto, and to newly acquired autos (typically broad if added within 14 days - immediately if the insured already carries comprehensive/collision on at least one auto).

Worked Example

An insured with $500 collision and $250 OTC deductibles strikes a deer, causing $4,000 of damage, then a week later slides into a guardrail for $3,000. The deer strike is OTC (Comprehensive): pay $4,000 - $250 = $3,750. The guardrail is Collision: pay $3,000 - $500 = $2,500. Misclassifying the deer strike as collision (and applying the $500 deductible) is the trap the question tests; the animal-impact-equals-comprehensive rule is essential.

Loss Settlement and Betterment

Physical-damage claims settle at the lesser of ACV or the cost to repair/replace, minus the deductible. If repairs use new parts that increase a vehicle's value, some policies apply betterment (the insured shares the cost of the upgrade). A total loss occurs when repair cost approaches or exceeds ACV; the insurer pays ACV minus deductible and takes the salvage. Gap coverage (an endorsement or lender product) pays the difference between ACV and a larger outstanding loan balance - a frequently tested shortfall when a financed car is totaled.