7.2 Exclusions and Part E Duties After an Accident

Part D Exclusions

Part D pays for fortuitous (accidental, sudden) physical damage. It therefore excludes losses that are really maintenance, deliberate misuse, or catastrophic in nature.

Exam trap: factory-installed stereo/navigation equipment is covered. Aftermarket (added later) equipment is excluded without an endorsement. Tires damaged on the road are excluded unless they are damaged as part of a larger covered loss such as a fire or vandalism.

A further trap involves diminution in value - the loss of resale value a repaired car suffers even after perfect repairs. The PAP does not pay diminished value on a first-party Part D claim in most states. Likewise, Part D excludes loss to a vehicle used as a public or livery conveyance (rideshare or taxi service) unless a specific endorsement is added.

Part E - Duties After an Accident or Loss

Part E lists the conditions (duties) the insured must satisfy after a loss. These are promises the insured makes; failing them can void or reduce coverage when the breach prejudices the insurer's ability to investigate or defend.

General duties owed for any claim:

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, and defense.
3. Forward any legal papers (summons, complaint) promptly.
4. Submit to physical exams by physicians the insurer selects and to examinations under oath.
5. Authorize the insurer to obtain medical reports and other records.
6. Submit a proof of loss when required.

Additional duties for a Part D (physical damage) claim:

• Take reasonable steps to protect the covered auto from further loss (the insurer will pay reasonable expenses to do so).
• Notify the police if the auto is stolen.
• Permit the insurer to inspect and appraise the damaged property before repair.

Duties Specific to Uninsured Motorists Claims

If the insured wants to recover under Part C - Uninsured Motorists (UM) coverage, two extra duties apply:

• Notify the police promptly if a hit-and-run driver caused the accident.
• Send copies of legal papers to the insurer if the insured sues the uninsured driver.

These UM duties let the insurer investigate a phantom hit-and-run quickly and protect its recovery rights against any driver later identified. A missing police report on a hit-and-run is a frequent reason a UM claim is denied in exam fact patterns.

Why the Duties Matter

The Duties After Loss clause is a condition precedent to coverage. Courts generally require the insurer to show it was prejudiced by a late notice or non-cooperation before voiding a claim, but a serious breach - such as repairing the car before inspection or never reporting a theft to police - can defeat an otherwise valid claim.

Proof of Loss and Appraisal

For a Part D claim the insurer may require a proof of loss - a sworn statement itemizing the damage and value. If the insured and insurer disagree on the amount (not on coverage), the policy's appraisal condition lets either party demand appraisal: each side hires an appraiser, the two select an umpire, and any two of the three set a binding amount. Appraisal resolves value disputes, never coverage disputes.

Finally, note the interaction with subrogation: when the insurer pays the insured's Part D loss caused by a third party, the insured must not impair the insurer's recovery rights - for example, by signing a release of the at-fault driver. Doing so is a breach of the duties that can reduce or void the payment.

Distinguishing Conditions from Exclusions

Candidates often confuse exclusions with conditions. An exclusion removes a peril or property from coverage at the outset (mechanical breakdown, racing, war). A condition (duty) is something the insured must do after a loss for an otherwise-covered claim to be paid (give notice, cooperate, allow inspection).

A practical rule for the exam: if the question describes what the insured failed to do after the accident, you are in Part E duties; if it describes what kind of loss occurred, you are in Part D exclusions.