Study guide
5.5 Part D: Physical Damage Coverage
Property & Casualty Insurance Exam
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1 Introduction
0.1 About the Property & Casualty Exam 0.2 How to Use This Course
2 Chapter 1: Insurance Fundamentals
1.1 Risk and Risk Management 1.2 Types of Risk 1.3 Principles of Insurance 1.4 The Insurance Contract 1.5 Policy Structure and Components
3 Chapter 2: Property Insurance Concepts
2.1 Property Coverage Basics 2.2 Perils, Hazards, and Exclusions 2.3 Valuation Methods 2.4 Coinsurance and Insurance to Value 2.5 Deductibles and Policy Limits
4 Chapter 3: Dwelling Policies
3.1 Dwelling Policy Overview 3.2 Dwelling Policy Forms (DP-1, DP-2, DP-3) 3.3 Dwelling Property Coverages 3.4 Dwelling Exclusions and Conditions
5 Chapter 4: Homeowners Policies
4.1 Homeowners Policy Overview 4.2 Homeowners Policy Forms (HO-2 through HO-8) 4.3 Section I: Property Coverages 4.4 Section II: Liability Coverages 4.5 Homeowners Exclusions 4.6 Homeowners Conditions 4.7 Common Homeowners Endorsements
6 Chapter 5: Personal Auto Policy
5.1 Personal Auto Policy Overview 5.2 Part A: Liability Coverage 5.3 Part B: Medical Payments Coverage 5.4 Part C: Uninsured/Underinsured Motorists 5.5 Part D: Physical Damage Coverage 5.6 PAP Exclusions 5.7 No-Fault Insurance and PIP
7 Chapter 6: Liability Insurance Concepts
6.1 Liability Insurance Basics 6.2 Negligence and Tort Law 6.3 Types of Legal Liability 6.4 Personal Umbrella Policies
8 Chapter 7: Commercial Property Insurance
7.1 Commercial Package Policy (CPP) 7.2 Building and Personal Property Coverage Form 7.3 Causes of Loss Forms 7.4 Business Income Coverage 7.5 Businessowners Policy (BOP)
9 Chapter 8: Commercial General Liability
8.1 CGL Policy Overview 8.2 Coverage A: Bodily Injury and Property Damage 8.3 Coverage B: Personal and Advertising Injury 8.4 Coverage C: Medical Payments 8.5 CGL Exclusions 8.6 CGL Limits and Conditions
10 Chapter 9: Commercial Auto Insurance
9.1 Business Auto Policy Overview 9.2 Covered Auto Designation Symbols 9.3 BAP Liability Coverage 9.4 BAP Physical Damage Coverage 9.5 Garage and Truckers Coverage Forms
11 Chapter 10: Workers Compensation
10.1 Workers Compensation Overview 10.2 Part One: Workers Compensation Insurance 10.3 Part Two: Employers Liability 10.4 Workers Compensation Exclusions 10.5 Other States and USL&H Coverage
12 Chapter 11: Other Commercial Lines
11.1 Inland Marine Insurance 11.2 Ocean Marine Insurance 11.3 Commercial Crime Insurance 11.4 Surety Bonds 11.5 National Flood Insurance Program 11.6 Professional Liability Insurance 11.7 Commercial Umbrella and Excess Liability 11.8 Boatowners and Personal Watercraft Insurance 11.9 Farm and Ranch Insurance 11.10 Mobile Home and Manufactured Housing Insurance 11.11 Title Insurance
13 Chapter 12: Insurance Regulations and Ethics
12.1 Producer Licensing 12.2 Producer Authority and Responsibilities 12.3 Unfair Trade Practices 12.4 Claims Settlement Practices 12.5 State Insurance Department 12.6 Penalties and Disciplinary Actions
5.5 Part D: Physical Damage Coverage
Key Takeaways Explain This Topic AI
Part D is first-party coverage for your own vehicle and has two parts: Collision and Other Than Collision (Comprehensive)
Collision is impact with another vehicle or object or an overturn; Other Than Collision covers theft, fire, glass, flood, hail, vandalism, falling objects, and animal strikes
Hitting an animal such as a deer is an Other Than Collision (Comprehensive) loss, NOT Collision — a frequently tested distinction
Part D pays the lesser of the vehicle's Actual Cash Value (ACV = replacement cost minus depreciation) or the repair cost, minus the deductible
Transportation expense pays a per-day amount up to a stated maximum after a covered theft or loss; aftermarket electronics and custom equipment need an endorsement
Last updated: June 2026
First-Party Coverage for Your Own Car
Part D — Coverage for Damage to Your Auto is first-party protection: it pays to repair or replace your vehicle. (Part A pays for damage you cause to others' property; Part D pays for your property.) Part D has two coverages an insured can buy separately, each with its own deductible.
1. Collision
Collision is the upset (overturn) of your covered auto or its impact with another vehicle or object . Collision pays regardless of fault — if you are at fault, your own Collision still repairs your car (the deductible applies, and the insurer may subrogate against an at-fault third party).
Examples: striking another car, hitting a guardrail, tree, or building, backing into a pole, pothole damage, and rolling the vehicle.
2. Other Than Collision (Comprehensive)
Other Than Collision (OTC) , also called Comprehensive , covers physical damage from causes other than collision:
- Peril Example
- Theft / larceny Vehicle stolen
- Fire / explosion Engine fire
- Glass breakage Cracked windshield
- Flood / water Submerged in a flood
- Hail / windstorm Hail dents, flying debris
- Vandalism / malicious mischief Keyed paint
- Falling objects Tree limb
- Contact with a bird or animal Deer strike
- Riot or civil commotion Vehicle damaged in unrest
Exam alert: hitting an animal (deer, dog) is Other Than Collision , not Collision. Swerving to avoid a deer and hitting a tree, however, IS Collision — the loss is the impact with the tree.
Collision vs. OTC Quick Reference
- Loss Collision Other Than Collision
- Hit another vehicle Yes No
- Overturn / rollover Yes No
- Hit a guardrail or pole Yes No
- Theft No Yes
- Fire No Yes
- Glass breakage No Yes
- Flood / hail No Yes
- Hitting a deer No Yes
- How Part D Settles a Claim
The insurer pays the lesser of :
- the vehicle's Actual Cash Value (ACV) , or
- the cost to repair or replace the property,
minus the deductible . ACV = replacement cost − depreciation.
Partial loss: repair $5,000; ACV $15,000; deductible $500 → pays $4,500 (repair is the lesser figure, minus the deductible).
Total loss: repair $12,000; ACV $10,000; deductible $500 → pays $9,500 (ACV is the lesser figure, minus the deductible). When repair cost meets or exceeds ACV, the insurer declares a total loss , pays ACV less deductible, and takes the salvage .
Deductibles
- Coverage Common deductibles
- Collision $500, $1,000, $2,500
- Other Than Collision $0, $100, $250, $500
- Glass-only (some states) Often $0 — waived to encourage repair
A higher deductible lowers the premium because the insured retains more of the small, frequent losses.
Transportation Expense and Gap
Part D includes Transportation Expenses — a per-day amount up to a stated maximum (commonly $20–$30 per day, up to about $600 total) for substitute transportation after a covered theft or other loss, often subject to a waiting period for theft. Gap exposure is the shortfall when the loan balance exceeds ACV (owe $25,000, ACV $20,000 = $5,000 gap); standard Part D does not pay gap — a separate loan/lease gap endorsement or coverage is required.
Part D Exclusions
- Exclusion Reason
- Wear and tear, freezing, mechanical or electrical breakdown Maintenance, not a fortuitous loss
- Road damage to tires Maintenance (covered only as part of a larger covered loss)
- Aftermarket electronic equipment Needs an endorsement (factory-installed is covered)
- Custom furnishings/equipment in a pickup or van Needs an endorsement
- Loss to a non-owned auto used regularly Not a covered auto
- War, nuclear hazard, radioactive contamination Catastrophic exclusion
- Racing or speed contests High-risk activity
- Non-Owned and Borrowed Vehicles
Part D extends to a non-owned auto the named insured or a family member is operating, but only at the broadest physical damage coverage already on the policy — and never to a vehicle furnished for the insured's regular use. This is the basis for the often-misunderstood rental-car answer: if the insured carries Collision and OTC on the personal car, that coverage typically follows to a short-term rental, subject to the policy deductible.
Many travelers nonetheless buy the rental company's collision damage waiver to avoid a deductible and loss-of-use disputes, but on the exam the default is that the insured's own Part D follows to a temporary non-owned auto.
Diminished Value and Loss of Use
Two limits surprise candidates. First, the standard PAP does not pay diminished value — the loss in resale value of a repaired vehicle — for the insured's own first-party claim; it pays the lesser of ACV or repair cost. Second, Part D's transportation/loss-of-use benefit is capped at a modest per-day amount with an overall maximum , not the full cost of an extended rental. An insured who wants a generous rental allowance should add a rental reimbursement endorsement with a higher daily limit, because the built-in transportation expense is intentionally small.
Total Loss Settlement Mechanics
When a vehicle is a total loss, the insurer establishes ACV using comparable-vehicle valuation tools, market listings, and condition adjustments. The insured receives ACV minus the deductible, plus, in most states, applicable sales tax and title/registration fees so the insured can buy a comparable replacement. The insurer takes the salvage and may sell it to offset the loss. If the insured disputes the ACV, the PAP's appraisal provision lets each side hire an appraiser and, if they disagree, an umpire decides — a Part F mechanism worth remembering for total-loss disputes.
Stated Endorsements That Expand Part D
- Endorsement What it adds
- Loan/lease (gap) coverage Pays the shortfall between ACV and loan balance
- Rental reimbursement Higher daily and total rental allowance
- Customized equipment Covers aftermarket electronics and custom work
- Original equipment / OEM parts Requires like-kind original-manufacturer parts
Tip: Part D follows the vehicle, not the driver — it covers your covered auto, temporary substitutes, and (within limits) a non-owned auto you are operating, but routinely excludes loss to a vehicle you use regularly that is not on the policy.