3.6 Parts E & F — Duties After Loss & General Provisions

Part E — Duties After an Accident or Loss

When a loss occurs, the insured must:

1. Give prompt notice to the insurer (how, when, where, names, and addresses of injured parties and witnesses).
2. Cooperate with the investigation, settlement, and defense of any claim or suit.
3. Forward all notices, summonses, and legal papers received.
4. Submit to physical exams by doctors the insurer chooses, and to an examination under oath (EUO).
5. Authorize the insurer to obtain medical and other relevant records.
6. Submit a sworn proof of loss when required.

No Voluntary Payments or Admissions

The insured must not voluntarily make any payment, assume any obligation, or incur any expense, except at their own cost — other than for first aid to others at the time of the accident. Note that this clause restricts payments and obligations, not casual statements at the scene.

Additional Part D (Physical Damage) Duties

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

Appraisal

If the insurer and insured disagree on the amount of loss (not on whether coverage applies), either may demand appraisal: each side selects a competent appraiser, the two appraisers select an umpire, and an award agreed to by any two of the three is binding as to the amount. Coverage disputes are never resolved by appraisal.

Part F — General Provisions

Bankruptcy of Insured

Bankruptcy or insolvency of the insured does not relieve the insurer of any of its obligations under the policy.

Fraud / Concealment / Misrepresentation

The policy provides no coverage for any insured who intentionally conceals or misrepresents a material fact or engages in fraudulent conduct connected with the policy.

Legal Action Against Us (Suit Clause)

No suit may be brought against the insurer until the insured has fully complied with the policy terms. For Part A, no action lies until the insured's obligation has been finally determined by judgment after trial or by written agreement among the insured, claimant, and insurer.

Subrogation (Our Right to Recover Payment)

After paying a loss, the insurer is subrogated to the insured's recovery rights; the insured must do nothing to impair them. Subrogation does not apply to Part B (Medical Payments) or Part D against an insured under the same policy.

Policy Territory

Because Mexico is not in the policy territory, an insured driving into Mexico must buy a Mexican tourist auto policy from an authorized Mexican insurer.

Termination — Cancellation and Nonrenewal

• By the insured: cancel any time by returning the policy or giving advance written notice of a future cancellation date.
• By the insurer in the first 60 days: cancel for almost any reason allowed by law.
• By the insurer after 60 days (or at renewal): cancel only for (1) nonpayment of premium, (2) suspension or revocation of the driver's license of the named insured or any regular operator, or (3) material misrepresentation or fraud.
• Notice: generally 10 days for nonpayment and 20 days for other reasons (state amendatory endorsements often require longer).
• Nonrenewal: typically 20–30 days' advance notice before the policy period ends.

Transfer of Your Interest

Rights and duties under the policy may not be assigned without the insurer's written consent, except that on the death of the named insured, coverage passes to the surviving resident spouse and to a legal representative while acting for the deceased's estate.

Worked Example: The No-Voluntary-Payments Trap

An insured rear-ends another driver, feels responsible, and writes the other driver a $4,000 check on the spot to 'settle' the damage, then files a claim. The insurer can refuse to reimburse that $4,000 because the insured voluntarily assumed an obligation and made a payment without the insurer's consent, violating Part E. The only payment the insured may make at the scene without permission is first aid to injured persons. Contrast a covered duty: the insured must promptly notify police of a theft and must protect the auto from further damage — and the insurer reimburses reasonable expenses for that protection.

The exam frequently pairs a sympathetic insured with a technical breach; the safe answer respects the no-voluntary-payments rule while noting that many courts still require the insurer to prove actual prejudice before denying coverage for a duties breach.

Territory and Cancellation in Practice

Territory questions almost always test Mexico: a U.S. insured who drives across the border has no PAP coverage there and needs a Mexican tourist auto policy from an authorized Mexican insurer, whereas trips into Canada and Puerto Rico remain inside the policy territory. Cancellation questions test the 60-day pivot. In the first 60 days the insurer has broad latitude to cancel; after 60 days it is locked into only three grounds — nonpayment, license suspension or revocation of a covered operator, or material misrepresentation/fraud.

Tie this to the fraud clause: a material misrepresentation such as a falsified garaging address both voids coverage for the dishonest insured and supplies a permitted mid-term cancellation ground even after the 60-day window has closed. Keep the notice periods straight: typically 10 days for nonpayment and 20 days for other reasons, with state amendatory endorsements frequently extending them.