7.2 Part D Exclusions and Part E Duties After an Accident

Part D Exclusions

Even though Other Than Collision is broad, the PAP lists specific Part D exclusions the exam tests heavily. The insurer will NOT pay for:

• Loss to a vehicle used as a public or livery conveyance (taxi, rideshare-for-hire without endorsement)
• 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, radioactive contamination, or governmental destruction/confiscation
• Loss to electronic equipment that reproduces sound/pictures (and tapes/discs/media) unless permanently installed, subject to a sublimit
• Loss to certain custom furnishings or equipment in pickups/vans not described/endorsed
• Loss to a non-owned auto used without a reasonable belief of permission
• Loss to trailers, campers, or motor homes not shown in the declarations (limited coverage may apply to a newly acquired trailer)

The Diminishing-Value and Betterment Traps

The PAP pays to repair or replace with like kind and quality, but it does not pay for diminution in value (the lost resale value of a repaired vehicle) under the standard form. Some states mandate it; absent that, do not assume coverage.

When repairs replace a worn part with a new one (for example new tires after a covered fire), insurers may apply betterment - charging the insured for the improvement when an old part is upgraded - though many carriers waive small betterments as a service.

Trap: Mechanical breakdown is NOT covered by Comprehensive. A blown transmission from normal use is excluded wear and tear. Only sudden, accidental external causes (fire, theft, flood) trigger OTC.

Part E - Duties After an Accident or Loss

Part E is a conditions section, not a coverage. It lists the duties an insured must perform; failure to comply can void or reduce a claim. There is no dollar limit here - it is the procedural backbone of every claim.

General duties owed to the insurer after any accident or loss:

1. Prompt notice to the insurer of how, when, and where the accident or loss happened, including names and addresses of injured persons and witnesses.
2. Cooperate with the company's investigation, settlement, or defense of a claim or suit.
3. Forward promptly any legal papers (summons, complaint) received in connection with the accident.
4. Submit, when required, to physical exams by physicians the insurer chooses, at its expense, and to an examination under oath (EUO).
5. Authorize the insurer to obtain medical and other relevant records.
6. Submit proof of loss when required.

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

When the insured seeks Part D payment, they must additionally:

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

For an Uninsured Motorist (Part C) claim arising from a hit-and-run, the insured must report a hit-and-run to police promptly and, if the insurer requests, send copies of legal papers.

Exam alert: Failing to notify the police of a theft, or repairing the vehicle before the adjuster inspects it, are the two classic breaches of Part D duties that can defeat a claim.

Why Duties Matter: Conditions vs. Coverage

A condition is a prerequisite to recovery; it is not itself a promise to pay. Insurance contracts are conditional - the insurer's duty to pay is triggered only when the insured first satisfies the policy conditions. If an insured breaches a material duty and the breach prejudices the insurer's ability to investigate or defend (for example, the car is crushed before inspection so the adjuster cannot verify the damage), the carrier may deny or reduce the claim.

Key contract characteristics tested alongside Part E:

• Conditional - benefits depend on the insured performing duties.
• Unilateral - only the insurer makes a legally enforceable promise; the insured promises nothing once premium is paid.
• Aleatory - the dollars exchanged are unequal and depend on chance.
• Contract of adhesion - drafted by the insurer; ambiguities are construed against the insurer (in favor of the insured).

Proof of Loss and Time Limits

For a physical-damage or theft claim, the insurer may require a sworn proof of loss - a formal statement of the loss amount, circumstances, and the insured's interest in the property. The insured must also submit to an examination under oath (EUO) when requested, separately from any other insured. Refusing an EUO is a breach of the cooperation duty.

The PAP also bars legal action against the insurer unless full compliance with all policy terms has occurred. For property/physical-damage claims, many policies require any suit to be brought within a stated period (often one or two years) after the loss - a contractual suit limitation distinct from a state statute of limitations.

Trap: "Prompt" notice does not mean "immediate to the second," but unreasonable delay that harms the insurer's investigation can still void a claim. Notify, protect the property, and document - in that order.