PERSONAL AUTO POLICY · 6 MIN READ

Physical Damage Endorsements and Loss Payee Rights

A family of endorsements tunes Part D to the insured's financing and vehicle situation. Auto Loan/Lease (GAP) coverage — the PP 03 09/PP 03 10 family — pays the difference between the ACV settlement on a totaled auto and the greater unpaid loan or lease balance, the classic problem when a new car depreciates faster than the loan amortizes (loan-to-value positions around the 80% trigger territory make the gap real). New Vehicle Replacement Coverage (PP 03 27) goes further for recent-model autos, paying replacement with a new vehicle rather than depreciated ACV. Stated Amount coverage (PP 03 08) schedules a dollar figure for hard-to-value vehicles, with the insurer paying the lesser of the stated amount, ACV, or repair cost. PP 13 02 keeps Part D in force but caps loss settlement at a scheduled maximum — useful to hold premium down on older or custom vehicles — while PP 03 22 deletes Part D from a vehicle entirely. Towing and Labor Costs (PP 03 03) pays small amounts for roadside disablement labor performed at the place of breakdown. Deductible mechanics have their own market features. Diminishing deductible programs credit the deductible downward at each claim-free renewal but typically preserve a floor rather than reaching zero, and a chargeable loss resets the progress; vanishing deductible branding describes the variant that can reach zero. Glass claims often enjoy an OTC deductible waiver. On total losses, carriers apply a total-loss threshold — commonly framed as a repair-cost-to-value ratio around 80% — to decide whether to repair or total the vehicle, and a totaled-and-rebuilt vehicle carries a salvage title with lasting valuation and insurability consequences. Accident forgiveness, by contrast, is a rating feature: it waives the surcharge for the first qualifying at-fault accident and does not transfer to a new carrier. Lenders are protected through the PP 03 05 Loss Payable Clause, which works like a standard (union) mortgage clause for autos: the loss payee's interest is not invalidated by the insured's acts or neglect — even intentional damage by the insured to collect proceeds — provided the payee notifies the insurer of known ownership or risk changes, pays premium on demand if the insured fails, and submits a sworn statement of loss when needed. When the insurer pays the lienholder while denying the insured, it takes the lienholder's rights against the borrower by subrogation. Long-term lessors are added as Part A additional insureds through the lessor endorsement family (PP 13 14 / PP 03 29), covering the lessor solely for liability arising from its ownership of the leased auto.