7.2 Exclusions and Part E Duties After an Accident

Part D Exclusions

Physical-damage coverage is broad but not unlimited. The PAP lists numerous Part D exclusions that examiners test heavily because they explain why a claim is denied even when damage clearly occurred. The most commonly tested exclusions are below.

Key Part D exclusions

• Wear and tear, freezing, mechanical or electrical breakdown - maintenance items, not insurable sudden loss. (Tire road damage is excluded unless caused by another covered loss.)
• Loss to a covered auto used as a public or livery conveyance (e.g., taxi). Share-the-expense car pools are an exception and remain covered.
• Radar/laser detectors, custom furnishings, and certain electronic equipment not designed for the vehicle, unless added by endorsement.
• Loss due to nuclear hazard, war, radioactive contamination.
• Loss to non-owned auto used without a reasonable belief of permission.
• Government destruction or confiscation (except return of a covered auto).
• Loss to electronic equipment that reproduces sound (and its media) unless permanently installed.

Exam trap: mechanical breakdown is excluded, but a covered peril that causes the breakdown is not. If a covered fire (OTC) destroys the engine, the engine damage is paid; if the engine simply fails from age, it is excluded. Similarly, custom equipment (special carpeting, murals, paint, equipment) is excluded over a small built-in sublimit and needs the Customized Equipment or appropriate endorsement to be fully covered.

A second frequently tested exclusion is the diminution in value denial: the PAP does not pay for the reduced market value of a properly repaired auto. The form also excludes loss to tires caused only by road damage and to a covered auto used as a delivery vehicle for hire under certain transportation-network arrangements unless a specific endorsement is added, reflecting how ride-share exposures have reshaped modern personal-auto underwriting.

Part E - Duties After an Accident or Loss

Part E spells out the insured's post-loss obligations. These are conditions - failing to perform them can void coverage for that claim. The exam frames Part E as "what the insured MUST do."

General duties (apply to ALL coverage parts)

1. Prompt notice to the insurer (or agent) of how, when, and where the accident or loss happened, including names and addresses of injured parties and witnesses.
2. Cooperate with the insurer in the investigation, settlement, or defense of any claim or suit.
3. Promptly forward copies of any legal papers or notices received connected to the accident.
4. Submit to physical exams and examination under oath (EUO) as often as reasonably required, and authorize the insurer to obtain medical and other records.
5. Submit a proof of loss when required.

Additional duties for Part D (physical damage) and UM/UIM

When seeking Part D (physical damage) or Uninsured Motorists coverage, the insured must also:

• Take reasonable steps to protect the covered auto from further loss (e.g., tarp a broken window). The insurer will pay reasonable expenses to do so.
• Promptly notify the police if the covered auto is stolen.
• Permit the insurer to inspect and appraise the damaged property before its repair or disposal.

Why duties matter - a worked scenario

An insured's covered auto is stolen. He waits three weeks to report it and never notifies police. The insurer may deny or reduce the theft claim because the insured breached two Part E duties: prompt notice and prompt police notification. The lesson examiners reinforce: coverage existed, but the conditions were not satisfied. Contrast this with a timely-reported theft where the insured cooperates fully - that claim is paid at ACV less the OTC deductible after the 48-hour transportation-expense waiting period.

Appraisal provision and dispute resolution

When the insurer and insured disagree on the amount of a physical-damage loss (not on whether coverage applies), either party may demand appraisal. Each side selects a competent, independent appraiser; the two appraisers choose an umpire.

The appraisers state separately the ACV and the amount of loss; agreement by any two of the three is binding as to the amount. Each party pays its own appraiser and shares the umpire cost. Examiners stress that appraisal resolves only the dollar amount, never the question of whether a peril is covered - coverage disputes still go to the legal-action process under Part F.

Other Insurance and proof of loss timing

For Part D, the Other Insurance condition makes the PAP pay only its pro-rata share when more than one policy covers the same loss - the insurer pays the proportion its limit bears to the total of all applicable limits. For a non-owned auto, the PAP is excess over any other collectible coverage.

On proof of loss, the insured must give the insurer the information it needs to value and verify the claim; in a theft, this typically includes a sworn statement and the police report number. Together with the protect-from-further-loss duty, these conditions show that Part D coverage is contingent on the insured's prompt, documented cooperation, a point exam questions test repeatedly.