7.2 Exclusions and Part E - Duties After an Accident

Why Exclusions Drive Exam Questions

The PAP's insuring agreements are broad; exclusions carve out losses that are uninsurable, better covered elsewhere, or against public policy. Many "the policy will NOT pay" questions are exclusion questions in disguise. Part D physical-damage exclusions are heavily tested, so group them mentally.

Key Part D exclusions in PP 00 01:

• Public or livery use - using the covered auto to carry persons or property for a fee (traditional taxi/delivery). Rideshare (Uber/Lyft) is excluded while the app is on, unless a ridesharing endorsement (e.g., PP 23 40) is added.
• Wear and tear, freezing, mechanical or electrical breakdown, and road damage to tires (unless caused by a covered total theft).
• Loss due to war, nuclear hazard, or radioactive contamination.
• Electronic equipment not permanently installed, and custom furnishings/equipment in pickups/vans, beyond stated sub-limits.
• Racing - loss while the auto is in or practicing for any prearranged or organized racing/speed contest.

Exclusion Traps to Memorize

The rideshare period matters: most personal policies exclude all three periods (app on/waiting, en route to passenger, passenger aboard) absent an endorsement, while the rideshare company's commercial policy typically starts only when a trip is accepted - leaving a gap the endorsement closes.

Part E - Duties After an Accident or Loss

Part E lists the conditions the insured must satisfy after a loss for the insurer to be obligated to pay. Failure to comply can void or reduce coverage. Part E duties are not coverages - they are obligations. The exam tests them as a checklist:

1. Prompt notice to the insurer 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 the investigation, settlement, or defense of any claim or suit.
3. Forward promptly any legal papers (summons, complaint) received in connection with the accident.
4. Submit, as often as reasonably required, to physical exams by chosen physicians and to examinations under oath (EUO).
5. Authorize the insurer to obtain medical reports and other pertinent records.
6. Submit a proof of loss when required.

The insurer's right to a physical exam and an EUO is a recurring exam point: these are not optional courtesies - refusal to attend a properly noticed EUO is a material breach that can support a denial. "As often as reasonably required" means the insurer may request more than one exam if the investigation warrants it.

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

When the insured seeks payment under Part D, two extra duties apply:

• Take reasonable steps to protect the covered auto from further loss (mitigation). The insurer reimburses reasonable expenses to do so; an insured who lets a wrecked, exposed car sit in the rain and sustain additional water damage may see that added damage denied.
• Permit the insurer to inspect and appraise the damaged property before its repair or disposal.

For a Part C uninsured/underinsured motorist claim from a hit-and-run, the insured must also notify the police promptly and, if the insured sues the uninsured motorist, send the insurer copies of the legal papers.

The overarching exam principle: the insurer's duty to pay is conditioned on the insured's good-faith performance of Part E. Late notice, refusal of an EUO, or repairing the car before inspection are common ways a payable claim becomes deniable.

Liability Exclusions That Also Appear on the Exam

Though this section centers on Part D and duties, students must not confuse physical-damage exclusions with the Part A liability exclusions, which are tested side-by-side:

• Intentional injury or damage caused by an insured.
• Property owned or being transported by an insured (damage to your own property is not third-party liability).
• Vehicles with fewer than four wheels or designed mainly for off-road use (with limited exceptions).
• Vehicles furnished or available for the insured's regular use but not described in the policy (the "company car" / "drive other car" gap, closed by a Named Non-Owner or DOC endorsement).
• Using a vehicle without a reasonable belief of being entitled to do so (e.g., a borrowed-without-permission or stolen vehicle).

A frequent distractor pairs a physical-damage fact pattern (a hailstorm) with a liability exclusion answer (intentional acts). Read whether the question asks who pays for your car (Part D) or for someone else's injury/property (Part A) before choosing the exclusion. The duties in Part E apply across all parts, but the additional protect-and-inspect duties are unique to Part D.