7.2 Exclusions and Part E Duties After an Accident

Part D Exclusions

The PAP excludes certain physical-damage losses outright. The exam tests these heavily because they explain why a seemingly covered claim is denied. Key Part D exclusions:

• Public or livery conveyance — using the auto to carry persons or property for a fee (taxi, ride-hail livery). Share-the-expense car pools are NOT excluded.
• Wear and tear, freezing, mechanical or electrical breakdown, road damage to tires — unless the loss results from a covered theft.
• Radar/laser detectors, custom furnishings/equipment in pickups and vans (unless declared/endorsed).
• Electronic equipment that reproduces sound/picture/data not permanently installed, and its media (tapes, discs).
• Government destruction or confiscation, and loss due to war, nuclear hazard.
• Non-owned auto used without a reasonable belief of permission, and autos with more than four wheels or designed mainly off public roads.

Two Special Limitations

1. Rental/leased-to-others limitation: Coverage does not apply to a covered auto rented to others or used as a public/livery conveyance — this is the gap that transportation network company (TNC) drivers must close with a commercial or rideshare endorsement.
2. Sound/electronic equipment cap: Even when permanently installed equipment is covered, custom electronics not factory-installed face limits unless scheduled.

Trap: the public-conveyance exclusion is why a personal auto policy will not pay for a wrecked Uber vehicle while a passenger is in the car. It applies across Parts A, B, C, and D. The car-pool carve-out is the classic distractor.

Part E: Duties After an Accident or Loss

Part E is a condition, not a coverage — it lists what the insured must do for the insurer to be obligated to pay. Failure to comply (when it prejudices the insurer) can void the claim. The general duties owed for any accident or loss:

• Promptly notify the insurer how, when, and where the accident or loss happened, plus names/addresses of injured persons and witnesses.
• Cooperate with the insurer in investigation, settlement, or defense.
• Send copies of legal papers (summons, complaint) if sued.
• Submit to physical exams by physicians the insurer chooses (relevant to Parts B/C) and to examination under oath.
• Authorize the insurer to obtain medical and other relevant records.

Additional Duties — Uninsured Motorists and Physical Damage

For a Part C (UM/UIM) claim, the insured must additionally:

• Promptly notify the police if a hit-and-run driver is involved; and
• Send copies of legal papers if the insured sues the uninsured/underinsured motorist.

For a Part D (physical damage) claim, the insured must also:

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

The duty to protect from further loss is the PAP analog of the property-insurance duty to mitigate. The duty to allow inspection before repair is why insureds should not authorize repairs until the adjuster sees the car.

Worked Example: Why a Claim Was Denied

An insured's car is stolen from a parking lot. The insured files a Part D OTC claim three weeks later and, in the interim, never reported the theft to police because "it seemed pointless." The insurer denies the theft claim.

Why? Two Part E breaches: (1) failure to promptly notify the police of the theft, and (2) delayed notice impairing the investigation. If the insurer can show the delay prejudiced its ability to investigate or recover the vehicle, the denial generally stands. The lesson the exam reinforces: Part E duties are conditions precedent — coverage that otherwise applies can be lost by non-compliance.

Appraisal Clause: Resolving a Valuation Dispute

When the insured and insurer agree the loss is covered but disagree on the amount, the PAP's appraisal provision (operating with Part D) lets either party demand appraisal. Each side hires a competent, independent appraiser; the two appraisers select an umpire. Agreement by any two of the three (the two appraisers, or one appraiser and the umpire) sets the binding loss amount. Each party pays its own appraiser and shares the umpire's fee equally.

Crucial limit: appraisal resolves valuation only, not coverage disputes. If the carrier denies that a peril is covered at all, appraisal cannot be forced — that is a coverage question for the courts. This mirrors the appraisal condition in property forms and is a common cross-over exam item linking auto and property concepts. The provision exists to keep dollar fights out of litigation while preserving the insured's right to a fair, independent valuation.

Sub-Limits, Reporting Timelines, and the Mitigation Duty

Two Part-D-adjacent details get tested. Custom equipment / electronics sub-limit: the unendorsed PAP caps non-factory sound and electronic equipment (often a modest stated amount such as $1,500) unless the items are scheduled by endorsement; an insured with an aftermarket stereo system worth $4,000 recovers only the sub-limit absent scheduling.

Mitigation as a continuing duty: the Part E duty to "protect the auto from further damage" is not a one-time act. If hail breaks a windshield and the insured leaves the car uncovered through a rainstorm, the interior water damage may be denied as a new, avoidable loss. The insurer reimburses reasonable protective expenses (tarps, towing to shelter), reinforcing that the insured and insurer share an interest in containing the loss.

Finally, note the difference between prompt notice (required) and an exact day count: the PAP says "promptly," and courts judge reasonableness in context — but theft always pairs with a police report, and any delay that prejudices investigation risks denial.