7.2 Exclusions and Part E Duties After an Accident

Part D Exclusions

The Part D insuring agreement is broad, so the exclusions do the heavy lifting on the exam. Memorize these categories — writers favor them because they separate a covered claim from a denial with a single fact change.

Maintenance and Predictable Losses

Part D does not pay for wear and tear, freezing, mechanical or electrical breakdown or failure, and road damage to tires. These are maintenance exposures, not fortuitous accidents. The freezing exclusion is set aside if the loss results from theft — a narrow exception the exam occasionally mentions.

Scenario — Carson City commute. An insured's transmission fails at 142,000 miles because of worn internal parts. No collision, no theft, no external peril — the failure is excluded as mechanical breakdown. If the same driver hits a pothole on US-395 and the tire sidewall tears from road contact alone, road damage to tires is also excluded unless another covered peril damaged the auto at the same time.

Use and Ownership Exclusions

Several exclusions target how the vehicle is being used:

• Loss to a vehicle used as a public or livery conveyance (taxi, ride-share for hire) is a major trap as gig driving grows in Las Vegas and Reno. A driver carrying passengers for a fee loses Part D (and Part A) coverage unless a ride-share endorsement is purchased. An ordinary carpool with shared gas costs remains covered.
• Loss while the covered auto is in the business of selling, repairing, servicing, storing, or parking vehicles belongs in a garage policy, not the PAP.
• Government destruction or confiscation, war, nuclear hazard, and radioactive contamination are excluded.

Equipment Caps and Other Notable Exclusions

Loss to electronic equipment that reproduces, receives, or transmits audio, visual, or data signals and is not permanently installed, and to custom furnishings in a pickup or van, is limited — a common stated cap is $1,500 for non-original electronic equipment — and otherwise excluded unless added by endorsement. Tapes, records, discs, and other media used with such equipment are excluded entirely.

Additional exclusions to know:

• Intentional damage by or at the direction of an insured (the fortuity requirement).
• Loss to a non-owned auto used without a reasonable belief the insured is entitled to use it.
• Loss to equipment designed for the detection or location of radar or laser speed-measuring devices.
• Loss to a camper body or trailer not shown on the Declarations (with limited exceptions for newly acquired items).

Worked equipment example. Thieves steal a removable $3,800 navigation and sound system from a parked truck in a Henderson shopping center. The base PAP pays up to the $1,500 cap for non-permanently installed electronics, not the full $3,800, unless a scheduled equipment endorsement was purchased.

Part E: Duties After an Accident or Loss

Part E lists the conditions the insured must satisfy after a loss. These are conditions precedent — the insurer's duty to pay is suspended until they are met, and a material breach can defeat the claim.

General Duties (All Coverages)

1. Prompt notice to the insurer of how, when, and where the accident or loss happened, with names and addresses of injured parties 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, or notices received.
4. Submit, as often as reasonably required, to physical exams by physicians the insurer chooses (for bodily injury claims) and to examinations under oath.
5. Authorize the insurer to obtain medical and other relevant records.

Additional Duties for Part D Physical Damage

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

Exam trap: A duty to notify the police applies specifically to theft. Failing to allow inspection before repairs, or refusing an exam under oath, gives the insurer grounds to deny that claim.

Duties as Conditions Precedent — Sequence and Consequences

The Part E duties are written as conditions, so they are read alongside the policy's general conditions. The insurer's promise to pay is conditional on the insured's performance. Courts generally require the insurer to show it was prejudiced by late notice before denying, but a clear refusal to cooperate, to submit a sworn proof of loss, or to permit appraisal is treated as a material breach without a prejudice showing.

Step-by-step after a covered loss:

1. Protect the vehicle from further damage (the insurer reimburses reasonable steps such as a tarp over a broken sunroof after hail).
2. Notify the police promptly if the auto is stolen — a theft-specific duty.
3. Report to the insurer with how, when, where, plus injured-party and witness details.
4. Preserve and permit inspection/appraisal before repairing or disposing of the vehicle.
5. Cooperate: recorded statement, exam under oath, sworn proof of loss, and medical authorizations for bodily injury claims.

Scenario — hail in Sparks. An insured's roof and hood are dented in a hailstorm. A body shop offers immediate repair. If the insured authorizes work before the adjuster inspects the original damage, the insurer may deny the claim because the insured breached the duty to permit inspection and appraisal before repair. The adjuster can no longer verify the loss extent.

Scenario — theft in Las Vegas. An insured discovers a vehicle missing from a Strip-area garage. Before calling the insurer, the insured must promptly notify police — a Part E duty tied specifically to theft. Skipping the police report while still calling the insurer leaves a critical step incomplete.

Why the Duties Matter for Nevada Producers

Nevada unfair-claims statutes (tested in the state-law portion) may constrain how quickly an insurer must respond, but they do not eliminate the insured's Part E obligations on the national exam. Producers who coach clients through the post-loss sequence — protect, report, preserve for inspection, cooperate — reduce claim disputes and reinforce that physical damage coverage is conditional, not automatic.

The distinction between excluded maintenance and covered accidental loss, combined with Part E compliance, appears constantly in combo-exam fact patterns. Read each scenario twice: first ask whether Part D covers the peril, then ask whether the insured satisfied every duty.