7.2 Exclusions and Part E - Duties After an Accident or Loss

Part D Exclusions

Part D does not cover every loss to the auto. The PP 00 01 lists exclusions that examiners test by example. The major exclusions are:

• Wear and tear, freezing, mechanical or electrical breakdown - ordinary maintenance items are not insured perils
• Road damage to tires - blowouts and tread wear are excluded (unless tires are damaged in a covered loss such as vandalism)
• Radioactive contamination, war, nuclear hazard
• Loss to electronic equipment reproducing sound, pictures, or data unless permanently installed, and related media
• Custom furnishings or equipment in a pickup or van (without endorsement)
• Loss arising from destruction or confiscation by government or civil authorities
• Use as a public or livery conveyance (taxi, ride-share for hire) and racing or speed contests

Many of these exclusions exist because the loss is not fortuitous (wear and tear, freezing, breakdown are expected and within the owner's control) or because the exposure belongs in a different policy (custom equipment, electronics, livery use). When examiners present a fact pattern, ask first whether the loss was sudden and accidental, then whether the use was personal - both must be true for Part D to respond.

Public/Livery and Non-Owned Auto Traps

The public or livery conveyance exclusion bars coverage when the insured carries persons or property for a fee - a classic exam trap involving taxi or for-hire delivery use. Note the exception: a share-the-expense car pool is NOT considered livery and remains covered.

A non-owned auto furnished or available for the insured's regular use is excluded. A vehicle borrowed occasionally is covered, but a company car driven daily, or a vehicle continuously available to the insured, falls outside the PAP and needs separate coverage.

Exam alert: Driving for a transportation network company (ride-share) is generally excluded under the livery exclusion while the app is on and carrying passengers. A ride-share endorsement or commercial policy is required to fill that gap.

Part E - Duties After an Accident or Loss

Part E imposes conditions the insured must satisfy after any loss. These are conditions precedent: failing them can void or reduce an otherwise valid claim. The general duties applicable to all coverages are:

1. Prompt notice - notify the insurer (or agent) of how, when, and where the accident or loss happened, plus names and addresses of injured persons and witnesses.
2. Cooperate with the insurer in investigation, settlement, and defense of any claim.
3. Forward promptly any legal papers (summons, complaint) received.
4. Submit, at the insurer's expense and as often as reasonably required, to physical exams by physicians the insurer selects and to examination under oath.
5. Authorize the insurer to obtain medical reports and other records.

These duties protect the insurer's ability to investigate while evidence is fresh and to control the defense of liability claims. Prompt notice matters most for liability: late notice that prejudices the insurer's ability to defend can support a denial in many states. The duty to cooperate also bars the insured from making voluntary payments or admissions of liability except at their own expense.

Additional Duties for Part D (Physical Damage) Claims

When seeking Part D coverage, the insured must also:

The Legal Action Against Us provision bars any lawsuit against the insurer unless the insured has fully complied with all policy terms. This ties Part E directly to the insured's right to recover - non-compliance is a defense to payment.

The duty to protect the auto from further loss is reciprocal: if the insured leaves a wrecked car exposed to rain or theft and the damage worsens, the insurer can decline to pay for the additional, avoidable damage. Conversely, reasonable expenses the insured incurs to protect the auto (towing it to safety, tarping a broken window) are reimbursable under Part D.

Proof of Loss and Appraisal

Many insurers require a proof of loss - a sworn statement of the amount and circumstances of the loss - within a stated period after request. Cooperating with this request is part of the insured's Part E duties.

The PAP also contains an appraisal condition for resolving valuation disputes. 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, and the two appraisers select an umpire. Agreement by any two of the three (the two appraisers, or one appraiser and the umpire) sets the loss amount.

Each party pays its own appraiser and shares the umpire's cost equally. Critically, demanding or completing appraisal settles only the dollar amount - it does not waive the insurer's right to deny the claim entirely on coverage grounds, nor does it waive any policy defense such as a Part E violation.