What is Auto Damage (AD)? - Insurance Navy. Auto damage (AD) includes any vehicle damage such as dents, scratches, or internal damage affecting the vehicle’s performance. Vehicle damage can result in various reasons such as auto accidents, vandalism, natural disasters, or wear and tear over period of time. In the insurance industry, auto damage is crucial as it directly affects the insurance claim process. When an insurance policyholder reports auto damage, the insurance company will typically send an insurance adjuster to assess the damage’s extent and determine the cost of repair. This assessment will then determine the amount of compensation the policyholder is entitled to under the terms of their auto insurance policies. It’s important to note that not all types of auto damage are covered by all auto insurance policies.