7.1 Part D Coverage for Damage to Your Auto (collision, other-than-collision)

Part D: Coverage for Damage to Your Auto

Part D of the ISO Personal Auto Policy (PAP) — current edition PP 00 01 — is the first-party physical damage section. It pays for direct and accidental loss to your covered auto or any non-owned auto, including its equipment, minus the deductible. It is optional coverage; many exam questions hinge on the fact that lenders require it but the state generally does not mandate it.

A covered auto for Part D includes any vehicle shown on the Declarations, a newly acquired auto, a trailer owned by the insured, and a temporary substitute vehicle used while the covered auto is out of service. A newly acquired auto generally has automatic coverage for a limited window (commonly 14 days) if the insured already carries Part D on at least one vehicle.

Part D is written in two distinct insuring agreements, each priced and deductible-rated separately:

• Collision — loss caused by the auto's impact with another vehicle or object, or by upset (overturn).
• Other Than Collision (OTC), also called Comprehensive — every other covered cause of loss.

Collision vs. Other Than Collision

The single most-tested concept in Part D is sorting a loss into the correct bucket. Collision is striking something or rolling over. OTC is essentially everything else that damages the car while it is not in a collision.

The PAP lists OTC causes by example, including missiles or falling objects, fire, theft or larceny, explosion or earthquake, windstorm, hail, water or flood, malicious mischief or vandalism, riot or civil commotion, contact with a bird or animal, and glass breakage. Because the list is illustrative, OTC is the broad "catch-all" peril; if a loss is not Collision and is not excluded, it falls into OTC.

Exam trap: Hitting a deer is Other Than Collision, not Collision. Glass breakage from a flying rock is OTC. But if glass breaks because the car rolled over, the insured may elect to treat it as Collision so a single deductible applies.

Loss Settlement and the ACV Basis

Part D pays the lesser of (a) the Actual Cash Value (ACV) of the stolen or damaged property, or (b) the amount necessary to repair or replace it — then subtracts the deductible. The insurer may also choose to repair, replace, or pay cash; the insured cannot demand a brand-new car.

ACV = Replacement Cost - Depreciation. Depreciation reflects age, mileage, and wear. This is why a total loss on an older vehicle often pays less than the loan balance, creating gap exposure (covered later in 7.3).

Worked ACV example

• Repair estimate after a collision: $9,400
• Vehicle ACV just before the loss: $7,800
• Collision deductible: $500

Because repair cost ($9,400) exceeds ACV ($7,800), the car is a total loss. The insurer pays the lesser figure, ACV, minus the deductible: $7,800 - $500 = $7,300.

Deductibles and Transportation Expenses

Collision and OTC carry separate deductibles (commonly $250, $500, or $1,000). A single occurrence can trigger only one of them. Raising the deductible lowers premium because the insured retains more small-loss risk.

Transportation Expenses pay a per-day rental/transit amount up to a stated maximum (e.g., $30/day, $900 maximum) plus coverage for loss-of-use the insured is legally liable for on a non-owned auto. For theft, a 48-hour waiting period applies before transportation expense begins; for other covered losses, coverage starts when the auto is disabled for more than 24 hours.

Glass and total-loss notes

Many insurers offer full glass coverage (no deductible) by endorsement because windshield repair is common. On a total loss, the insurer may add applicable sales tax and title/registration fees to the ACV in many jurisdictions, but it never pays more than the lesser of ACV or repair cost before the deductible and any tax add-back.

Collision vs. OTC Sorting Drill

The exam reliably asks you to bucket a physical-damage loss. Lock in the rule: Collision = impact with another object or upset/overturn; everything else covered goes to Other Than Collision (OTC/Comprehensive).

The last row is a deliberate trap: swerving to miss an animal and hitting a guardrail is Collision, but striking the animal itself is OTC — the difference can mean two different deductibles.

Settlement, Deductibles, and Add-Backs

Part D pays the lesser of ACV or repair cost, minus the applicable deductible (collision and OTC carry separate deductibles; only one applies per occurrence). On a total loss, many states require the insurer to add sales tax and title/registration to the ACV.

Worked total-loss example: ACV = $11,000; repair estimate = $13,500; collision deductible = $500; applicable sales tax = $700. Because repair > ACV, it totals: pay $11,000 ACV + $700 tax − $500 deductible = $11,200.

Transportation expense reimburses a daily rental amount (e.g., $30/day, $900 max) for theft after a 48-hour wait or other covered loss after the auto is disabled more than 24 hours. Full glass coverage waives the deductible on windshield claims by endorsement. Exam trap: Part D is first-party and optional; the state mandates liability, not physical damage — lenders, not the law, force collision/OTC.