7.2 Exclusions and Part E - Duties After an Accident

Part D Exclusions

The PAP lists exclusions that strip back the broad Part D grant. The most heavily tested exclusions are:

• Public or livery conveyance - using the covered auto to carry persons or property for a fee (ride-share/taxi). Share-the-expense car pools are not excluded.
• Wear and tear, freezing, mechanical or electrical breakdown, and road damage to tires - unless the loss results from a covered theft.
• Radar/laser detection equipment, custom electronics, and tapes/records/discs beyond a small sublimit.
• Loss to a non-owned auto used without a reasonable belief of permission.
• Government destruction or confiscation (except return of a stolen, recovered vehicle).
• War, nuclear hazard, and radioactive contamination.
• Loss to electronic equipment designed to reproduce sound unless permanently installed, and similar limitations on custom furnishings/equipment in pickups and vans.

The livery exclusion is the single most common exam trap because of ride-share growth - personal PAPs exclude it, requiring a ride-share endorsement or commercial coverage.

Other Limiting Provisions

Part D also limits payment for diminution in value - the PAP generally does not pay for loss in resale value after a properly repaired vehicle. Several states regulate this, but on the national portion the default answer is that diminished value is excluded for first-party PAP claims.

A small non-owned trailer sublimit (commonly $1,500) applies. Equipment exclusions exist for awnings, cabanas, and equipment in campers.

Part E - Duties After an Accident or Loss

Part E is a condition, not a coverage. It lists the duties an insured must perform for any claim under the policy, and breach of these duties can void or reduce coverage where the insurer is prejudiced. The general duties owed by any person seeking coverage are:

1. Cooperate with the insurer in the investigation, settlement, and defense of any claim or suit.
2. Promptly send copies of any notices, summonses, or legal papers received.
3. Submit, as often as reasonably required, to physical exams by physicians the insurer chooses (at the insurer's expense) and to examinations under oath (EUO).
4. Authorize the insurer to obtain medical reports and other pertinent records.
5. Submit a proof of loss when required.

Failure to cooperate or to provide notice can be a complete defense if the insurer is materially prejudiced.

Additional Duties for Part D (Physical Damage) and UM Claims

A person seeking Part D coverage owes two extra duties:

• Take reasonable steps after a loss to protect the covered auto and its equipment from further loss - the insurer pays reasonable expenses incurred to do so (e.g., towing a wreck off the roadway, tarping a broken window).
• Permit the insurer to inspect and appraise the damaged property before its repair or disposal.

For uninsured/underinsured motorist and a hit-and-run claim, the insured must additionally report the accident to the police promptly and, if a hit-and-run, send the insurer copies of legal papers within the required period.

Worked timeline example. An insured's car is stolen on Day 0. To preserve the claim the insured should: notify police promptly (UM/theft reporting), report to the insurer promptly, and - because transportation expenses begin 48 hours after a theft - a rental started on Day 1 is not reimbursable, but one started on Day 3 is, up to $20/day to $600.

The Appraisal Condition

If the insured and insurer disagree on the amount of a Part D loss, either party may demand appraisal. Each side selects a competent, independent appraiser; the two appraisers select an umpire. A decision agreed to by any two of the three (the two appraisers, or one appraiser plus the umpire) is binding as to the amount of loss only - appraisal never decides whether coverage applies. Each party pays its own appraiser and shares the umpire's cost equally.

This is a frequent exam item: appraisal resolves valuation disputes, not coverage disputes. A denial based on an exclusion is litigated, not appraised.

Wear-and-Tear and Electronic-Equipment Limits

Part D (physical damage) excludes wear and tear, freezing, mechanical breakdown, road damage to tires, and depreciation — these are maintenance, not insurable fortuities. It also limits custom electronic equipment not permanently installed and tapes/discs/media. The wear-and-tear exclusion is the classic distractor when a candidate is asked whether collision will pay for a worn-out transmission (it will not).

Notice, Cooperation, and the Right to Inspect

Part E duties run to every covered claim: prompt notice, cooperation (statements, exams under oath, attending hearings), submitting to physical exams for injury claims, authorizing release of records, and — for theft — notifying the police. Failing a material duty (e.g., not reporting a stolen car to police, or refusing an exam under oath) can forfeit coverage. The police-notification requirement for theft and the cooperation clause are frequently tested forfeiture triggers.