7.2 Exclusions and Part E: Duties After an Accident

Part D Physical-Damage Exclusions

Every coverage grant is shaped by its exclusions, and the national exam tests the major Part D exclusions heavily. These exclusions exist to remove uninsurable or morally hazardous losses, to push commercial exposures to the proper policy, and to prevent overlap with manufacturer warranties.

Key Part D exclusions include:

• Public or livery conveyance - carrying persons or property for a fee (taxi, rideshare-for-hire) is excluded unless a share-the-expense car pool.
• Wear and tear, freezing, mechanical or electrical breakdown - maintenance items and gradual deterioration are not accidental losses.
• Road damage to tires unless the tire damage is part of a covered loss to the rest of the vehicle.
• Radioactive contamination, war, nuclear hazard, and government destruction/confiscation.
• Electronic equipment - tapes, records, discs, and certain non-factory sound/electronic equipment unless permanently installed or specifically scheduled.
• Custom furnishings or equipment in a pickup or van unless declared.
• Vehicles used in racing or speed contests on a track.

Trap: The wear-and-tear and mechanical-breakdown exclusions catch many candidates. An engine that fails from age is not a Part D loss; an engine destroyed by a covered collision is. Physical-damage coverage responds to sudden and accidental events, never to maintenance.

Other-Insurance and Two-or-More-Autos Provisions

When Part D physical-damage coverage from more than one policy applies - most often on a non-owned (borrowed or rental) auto - the PAP pays excess over any other collectible physical-damage insurance. The owner's policy on the borrowed car is primary; the borrower's PAP is excess and only drops down for the difference (such as a smaller deductible or higher limit).

The two or more autos provision prevents stacking on a single vehicle: if two PAPs issued by the same insurer cover the same auto, the insurer's maximum is the highest limit under any one policy, not the sum.

Trap: Candidates assume the driver's policy always pays first. For physical damage to a non-owned auto, the owner's coverage follows the car and is primary. The driver's PAP sits excess.

Part E - Duties After an Accident or Loss

Part E is a conditions section, not a coverage grant. It lists the duties the insured must perform after a loss; failure to comply can reduce or void coverage because the insurer is prejudiced. Part E is short but consistently produces exam questions.

General duties applying to all coverages:

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 insurer in investigation, settlement, or defense.
3. Forward promptly any legal papers, notices, or demands received (a summons or complaint).
4. Submit, as often as reasonably required, to physical exams by company-chosen physicians and to examination under oath.
5. Authorize the insurer to obtain medical reports and other pertinent records.
6. Submit a proof of loss when required.

Additional duties for a person seeking Part D (physical damage) coverage:

• Take reasonable steps after a loss to protect the covered auto from further damage (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 its repair or disposal.

Why the Duties Matter and Common Pitfalls

The duties in Part E protect the insurer's ability to investigate and control losses. An insured who repairs or scraps a wrecked car before the adjuster inspects it has breached the duty to permit inspection and may forfeit the claim. An insured who fails to report a theft to police has breached a Part D-specific duty.

Worked scenario: An insured's car is stolen Friday night. The insured reports it to the company Monday but never files a police report and sells the recovered shell before the adjuster sees it. Two duties are breached - prompt police notice for theft and permitting inspection before disposal - giving the insurer grounds to deny or reduce the claim.

Note the difference between notice and proof of loss: notice is the initial report that a loss occurred; proof of loss is the later sworn statement of the amount claimed, required only when the insurer requests it. The exam may ask which duty is triggered immediately (notice) versus on demand (proof of loss, exam under oath, physical exam).

Trap: "Examination under oath" and "physical examination by a doctor of the insurer's choice" are both legitimate insurer rights under Part E. Candidates sometimes mark these as improper invasions of privacy - they are contractual duties the insured agreed to.

Finally, distinguish a Part E duty from a Part F condition. Part E governs what the insured must do after a loss; Part F (covered in the next section) governs the contract as a whole, including fraud, subrogation, and legal action. The exam may pair a duty with the consequence of breach: an insurer that is prejudiced by late notice or destroyed evidence may deny the claim, but a trivial, non-prejudicial delay generally will not void coverage on its own. Reasonableness and prejudice are the touchstones the exam applies.