North Dakota · Casualty Insurance Sample Interactive Mind Map
PAP Part D: Physical Damage Coverage
A visual breakdown of PAP Part D: Physical Damage Coverage — one of the concepts you can count on seeing on the exam.
The TESTivity Interactive Mind Mapping Graphic we picked for the North Dakota Casualty Insurance sample is PAP Part D: Physical Damage Coverage — and this is a concept you can count on seeing on your pre-licensing exam. Get the structure straight once and those questions turn into free points.
So explore it. Click through, see how the pieces relate, and let the layout do some of the remembering for you.
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Part D is first-party property coverage — it pays for damage to the insured's own vehicle, not claims by others.
Collision and Comprehensive are the two distinct coverages under Part D, each with its own deductible. Knowing which cause of loss triggers which coverage is the #1 tested Part D skill.
Collision and Comprehensive are the two distinct coverages under Part D, each with its own deductible. Knowing which cause of loss triggers which coverage is the #1 tested Part D skill.
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Collision Coverage
Impact with another vehicle or object · Overturn · Fault is irrelevant
What Collision Covers
Impact with another vehicle
Any crash involving another car, truck, or vehicle
Any crash involving another car, truck, or vehicle
Impact with any object
Guardrail, tree, building, wall, pothole, curb
Guardrail, tree, building, wall, pothole, curb
Vehicle overturn
Rollover — regardless of what caused the vehicle to tip
Rollover — regardless of what caused the vehicle to tip
Fault Is Irrelevant
Collision coverage pays for damage to the covered auto regardless of who caused the accident. If the insured is entirely at fault, collision pays. If the other driver is 100% at fault, collision still pays — and the insurer will subrogate against the at-fault driver to recover the claim payment and deductible.
At-Fault Driver's Liability vs. Own Collision
When the other driver is at fault, the insured can choose to:
• File under the at-fault driver's liability coverage (no deductible, but slower)
• File under their own collision coverage and let the insurer recover via subrogation
• File under the at-fault driver's liability coverage (no deductible, but slower)
• File under their own collision coverage and let the insurer recover via subrogation
Subrogation
When the insurer pays a collision claim and the other driver was at fault, the insurer steps into the insured's shoes and pursues the at-fault driver (or their insurer) to recover the claim payment — including the insured's deductible.
The Deductible Always Applies
There is no fault exception to the collision deductible. Whether the insured caused the accident or was a completely innocent victim, the deductible applies. If subrogation succeeds, the deductible is returned to the insured.
Exam angleCollision pays regardless of fault. Deductible applies regardless of fault. Insured's options when the other driver is at fault: use own collision (faster, but pays deductible) or pursue other driver's liability (no deductible, but may take longer). Insurer subrogates when it pays a claim caused by a third party.
Comprehensive covers everything that isn't collision — it's technically open perils for auto physical damage.
The deer distinction is the single most tested Comprehensive fact. And the "swerve to avoid + hit something" scenario is a classic exam trap. Know both cold.
The deer distinction is the single most tested Comprehensive fact. And the "swerve to avoid + hit something" scenario is a classic exam trap. Know both cold.
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Other Than Collision (Comprehensive)
Open perils — covers all causes except collision and listed exclusions
Covered Causes of Loss
🔥 Fire & Explosion
🔑 Theft or Attempted Theft
🌊 Flood
🌩️ Windstorm, Hail, Water
🌍 Earthquake
🎨 Vandalism
🦌 Contact with Bird or Animal
🌳 Falling Objects
🪟 Glass Breakage
Open PerilsComprehensive is technically open perils — it covers all causes of loss EXCEPT collision and a handful of specific exclusions. If it's not collision and not excluded, it's comprehensive. This matters when you encounter an unusual scenario on the exam that isn't specifically listed.
🦌 The Deer Distinction — The #1 Tested Comprehensive Fact
Scenario A
You hit a deer while driving. The deer runs into the road and your car strikes it.
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🟢 COMPREHENSIVE
Contact with an animal = OTC
Contact with an animal = OTC
Scenario B
A deer strikes your stationary vehicle while you are parked.
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🟢 COMPREHENSIVE
Animal contact = OTC regardless of who was moving
Animal contact = OTC regardless of who was moving
Scenario C — The Trap
You swerve to avoid a deer and crash into a guardrail. No contact with the deer.
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🔴 COLLISION
Impact with object (guardrail) = collision
Impact with object (guardrail) = collision
The rule: The animal contact itself is always comprehensive. If you avoid the animal and hit something else instead, the cause of loss to your vehicle is the collision with that object — not the animal. The deer was the reason you swerved, but it didn't damage your car.
Part D settles losses at Actual Cash Value — not replacement cost, not purchase price.
Separate deductibles apply to collision and comprehensive. ACV reflects depreciation, and the gap between ACV and a loan balance is a real financial exposure that gap insurance addresses.
Separate deductibles apply to collision and comprehensive. ACV reflects depreciation, and the gap between ACV and a loan balance is a real financial exposure that gap insurance addresses.
💥 Collision Deductible
🌪️ Comprehensive Deductible
Typical Amount
Higher — commonly $500 or more. Higher deductible = lower premium.Typical Amount
Lower — commonly $250 or less. Some insureds carry $0 comprehensive deductible.Why Higher
Collision losses are more frequent and more controllable — driving behavior influences collision risk. Insureds absorb more of the cost to keep premiums manageable.Why Lower
Comprehensive losses (theft, hail, flood) are less controllable — the insured can't prevent a hailstorm. Lower deductible reflects the unpredictable nature of these perils.Fault & Deductible
Applies regardless of fault. Even if the other driver caused the accident, the insured pays the deductible when using their own collision coverage.Subrogation Recovery
If the insurer subrogate against an at-fault third party and recovers, the insured's deductible is returned.Example
$3,000 damage – $500 deductible = $2,500 insurer paysExample
$4,800 hail damage – $250 deductible = $4,550 insurer pays📉
Actual Cash Value (ACV)
Market value at time of loss — depreciation applies
How ACV Is Determined
ACV = the market value of the vehicle at the time of loss, reflecting its age, mileage, condition, and depreciation. Determined by market data — comparable vehicles for sale in the same area with similar specs. NOT the original purchase price.
The Insurer Pays the Lesser Of
1. The ACV of the damaged or stolen vehicle, or
2. The cost to repair or replace with property of like kind and quality
Whichever is less protects the insurer from paying more than the vehicle is worth.
2. The cost to repair or replace with property of like kind and quality
Whichever is less protects the insurer from paying more than the vehicle is worth.
📊 Total Loss Calculation Example
Vehicle ACV at time of loss:$18,000
Collision deductible:− $500
Insurer pays:$17,500
Outstanding loan balance:$24,000
GAP (loan minus ACV payout):$6,500 still owed to lender
Without gap insurance, the insured owes $6,500 to the lender even after the insurance settlement is received.
- Total loss: When repair cost exceeds ACV (or a state-specified percentage of ACV, typically 75–80%), the insurer declares a total loss, pays ACV minus deductible, and takes title to the salvage.
- Gap insurance covers the difference between ACV and the loan/lease payoff balance. Critical for new car buyers and lessees, since new vehicles depreciate rapidly.
- Original purchase price is irrelevant to the ACV calculation. A car bought for $32,000 three years ago may have an ACV of $18,000 at the time of loss.
Exam angleACV = market value at time of loss (depreciated). NOT replacement cost. Total loss = repair cost exceeds ACV. Gap insurance covers loan/lease balance above ACV. Without gap coverage, the insured may owe money to the lender after the total loss settlement.
Transportation expense covers rental costs when a covered Part D loss puts the car out of commission.
The 48-hour waiting period for theft, the daily/aggregate limits, and when coverage ends are all tested details. The exclusions show what Part D deliberately does not cover.
The 48-hour waiting period for theft, the daily/aggregate limits, and when coverage ends are all tested details. The exclusions show what Part D deliberately does not cover.
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Transportation Expense Coverage
Rental reimbursement when a covered Part D loss disables the vehicle
How It Works
Pays for rental car costs or other transportation expenses (taxi, ride-share, bus) while the covered auto is being repaired or replaced after a covered Part D loss. Typical limits: $30/day up to a $900 aggregate.
Requires a Covered Part D Loss
Transportation expense is triggered only when a covered Part D loss has occurred. It does NOT pay for rental cars during mechanical breakdowns, routine maintenance, or other non-covered situations.
📅 Transportation Expense Timeline
Covered Part D Loss Occurs
Collision, comprehensive loss, or theft triggers potential transportation expense coverage.
⏱️ 48-Hour Waiting Period (Theft Only)
For stolen vehicles, coverage begins 48 hours after the theft — not immediately. This delay allows time for vehicle recovery before rental costs begin. For other covered losses (collision, hail, etc.), the waiting period does not apply.
Coverage Period — $30/Day Accumulating
Transportation expenses accumulate at up to $30/day (or the policy limit) during the repair or replacement period.
✅ Coverage Ends When…
• The auto is repaired and returned to the insured, or
• A replacement vehicle is purchased, or
• The aggregate limit ($900) is exhausted — whichever occurs first
• A replacement vehicle is purchased, or
• The aggregate limit ($900) is exhausted — whichever occurs first
Exam angle48-hour waiting period applies to theft only. Transportation expense requires a covered Part D loss — not mechanical breakdown. Coverage ends at the aggregate limit, when the car is fixed, or when a replacement is purchased. Know all three ending conditions.
❌ Part D Exclusions
🔧 Wear, Tear & Mechanical Breakdown
Normal wear and tear, mechanical failure, and road damage to tires are not physical damage losses — they're maintenance items. Part D covers accidents, not aging.
💼 Personal Property Inside the Vehicle
Luggage, laptops, cameras, and other personal belongings inside the car are not covered by Part D. They are covered under the homeowners policy (Coverage C off-premises). Part D covers the vehicle itself.
📻 Non-Permanently Installed Electronics
Electronic equipment not permanently installed — portable GPS units, aftermarket radios that aren't part of the vehicle's factory system.
🚕 Livery / For-Hire Use
The livery exclusion applies to Part D just as it does to Part A. Rideshare and delivery use requires a separate endorsement or commercial policy.
☢️ Radioactive Contamination / War
Standard catastrophic peril exclusions appearing across most property and auto policies.
🚐 Custom Equipment Not in Premium
Camper bodies, trailers, and aftermarket customizations not reflected in the policy premium. Custom equipment needs to be declared and rated to be covered.
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Personal Property in the Car — Homeowners, Not PAP
One of the most commonly tested Part D exclusion scenarios: the insured's car is broken into and a laptop is stolen from the back seat. Is this covered by Part D?
No. Personal property inside the vehicle is not covered by Part D — it's covered by the homeowners policy under Coverage C (personal property), which extends to off-premises locations. The vehicle itself would be covered under Part D (broken window, etc.), but the laptop is an HO claim.
No. Personal property inside the vehicle is not covered by Part D — it's covered by the homeowners policy under Coverage C (personal property), which extends to off-premises locations. The vehicle itself would be covered under Part D (broken window, etc.), but the laptop is an HO claim.
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Top Exam Tips — PAP Part D Physical Damage
1. Collision = impact with a vehicle or object, overturn. Fault is irrelevant — deductible applies regardless.
2. Hitting a deer = Comprehensive. Swerving to avoid a deer and hitting a guardrail = Collision. The animal contact itself is always Comprehensive.
3. Comprehensive is open perils — covers all causes except collision and listed exclusions. Hail, theft, flood, fire, falling objects, vandalism, glass breakage.
4. ACV = market value at time of loss — not purchase price, not replacement cost. Depreciation applies.
5. Gap insurance covers the difference between ACV and the loan/lease balance. Without it, a totaled financed vehicle can leave the owner owing money.
6. Transportation expense: 48-hour waiting period for theft. Ends when vehicle is repaired, replaced, or aggregate is exhausted.
7. Personal property in the car (laptop, luggage) = NOT covered by Part D. Covered by homeowners policy.
2. Hitting a deer = Comprehensive. Swerving to avoid a deer and hitting a guardrail = Collision. The animal contact itself is always Comprehensive.
3. Comprehensive is open perils — covers all causes except collision and listed exclusions. Hail, theft, flood, fire, falling objects, vandalism, glass breakage.
4. ACV = market value at time of loss — not purchase price, not replacement cost. Depreciation applies.
5. Gap insurance covers the difference between ACV and the loan/lease balance. Without it, a totaled financed vehicle can leave the owner owing money.
6. Transportation expense: 48-hour waiting period for theft. Ends when vehicle is repaired, replaced, or aggregate is exhausted.
7. Personal property in the car (laptop, luggage) = NOT covered by Part D. Covered by homeowners policy.
Exam vocabulary
Key Terms to Know
Collision Coverage
Pays for damage to the covered auto from impact with another vehicle or object, or overturn. Fault is irrelevant — deductible always applies.
Other Than Collision (OTC / Comprehensive)
Open perils coverage for damage to the covered auto from any cause except collision and listed exclusions. Includes theft, fire, flood, hail, vandalism, animal contact, and falling objects.
Actual Cash Value (ACV)
The market value of the vehicle at the time of loss, reflecting age, mileage, condition, and depreciation. Part D settles losses at ACV, not replacement cost.
Total Loss
When the cost to repair exceeds the vehicle's ACV (or a state threshold, typically 75–80% of ACV). Insurer pays ACV minus deductible and takes title to the salvage.
Gap Insurance
Covers the difference between a vehicle's ACV and the outstanding loan or lease balance. Critical for new car buyers and lessees whose loan may exceed the vehicle's depreciated value.
Transportation Expense
Pays rental or other transportation costs while the covered auto is repaired or replaced after a covered Part D loss. For theft: 48-hour waiting period before coverage begins.
Subrogation
After paying a collision claim caused by a third party, the insurer steps into the insured's shoes to pursue recovery from the at-fault driver. If successful, the insured's deductible is returned.
Open Perils
A form of coverage that covers all causes of loss except those specifically excluded. Comprehensive (OTC) is open perils — if it's not collision and not excluded, it's covered.
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