7.2 Part D Exclusions and Part E: Duties After an Accident
Key Takeaways
- Part D excludes public/livery use, wear-and-tear and mechanical breakdown, racing, war/nuclear, and unscheduled electronic equipment.
- Mechanical or freezing damage that results from a covered theft is still payable because it follows a covered peril.
- Part E general duties apply to all coverages: prompt notice, cooperation, forwarding legal papers, exams, and authorizations.
- Theft (Part D) and hit-and-run (Part C) both require prompt police notification as an additional duty.
- Part D additionally requires the insured to protect the auto from further loss and permit inspection before repair.
Part D Exclusions
Part D contains a substantial exclusion list that narrows the broad "direct and accidental loss" grant. The exam tests these because each reflects a real underwriting concern: moral hazard, commercial exposure, war/nuclear catastrophe, and contractual displacement of coverage. The major Part D exclusions are:
- Public/livery use: Loss to a covered auto while used as a public or livery conveyance (taxi, for-hire). The form carves out share-the-expense car pools, but ride-hail (TNC) activity needs an endorsement.
- Wear, tear, and mechanical breakdown: Freezing, mechanical/electrical breakdown, and road damage to tires are excluded unless caused by total theft.
- Radar/laser detectors, and certain electronic equipment not permanently installed.
- Government destruction/confiscation.
- War and nuclear hazards.
- Non-owned auto used without reasonable belief of entitlement.
- Awning/cabana/camper equipment designed for use with a trailer.
The diminishing exclusions and the racing exclusion
Two Part D exclusions are heavily tested:
- Racing exclusion: No coverage for loss to a covered auto while it is being operated in, or in practice for, any prearranged or organized racing or speed contest. Note this excludes physical damage to the insured's own car; the parallel liability exclusion sits in Part A.
- Custom/electronic equipment caps: The base form limits coverage for non-factory sound reproduction and electronic equipment unless scheduled by endorsement PP 03 13 (Coverage for Audio, Visual and Data Electronic Equipment).
Trap: "Mechanical breakdown is excluded" — but if a thief steals the whole car and damages the transmission, the resulting loss is covered because it follows a covered theft. Likewise, freezing is excluded unless the insured used reasonable diligence; a sudden first-party covered cause that produces consequential damage may still be paid.
Part E: Duties After an Accident or Loss
Part E is a conditions section, not a coverage. It states the obligations the insured must satisfy as a precondition to the insurer's duty to pay. Failure to comply that prejudices the insurer can void coverage for that claim. The general duties applicable to all coverages are:
- Prompt notice to the insurer of how, when, and where the accident or loss happened, including names and addresses of injured persons and witnesses.
- Cooperate with the insurer in the investigation, settlement, or defense of any claim or suit.
- Forward promptly any notice, summons, or legal papers received.
- Submit, as often as reasonably required, to physical exams by physicians the insurer selects (and examinations under oath).
- Authorize the insurer to obtain medical reports and other pertinent records.
Additional duties for specific coverages
The form layers extra duties on top of the general list:
| Coverage | Additional duty after loss |
|---|---|
| Part C (Uninsured Motorists) | Notify police promptly if a hit-and-run; send the insurer copies of legal papers if suing the responsible party |
| Part D (Physical Damage) | Take reasonable steps to protect the auto from further loss; notify police if the auto is stolen; permit inspection/appraisal before repair |
| Part B (Medical Payments) | Submit proof of claim and authorize medical records |
Trap: The duty to protect from further loss in Part D means the insurer will pay reasonable expenses the insured incurs to mitigate (e.g., tarping a broken window). But it also means an insured who abandons a damaged car and lets it deteriorate may see the additional damage denied. The duty to notify police is mandatory for theft (Part D) and hit-and-run (Part C).
Notice, Cooperation, and the Consequences of Breaching Duties
Part E imposes post-loss duties on the insured, and the exam tests what happens when they are breached.
| Duty | What the insured must do |
|---|---|
| Prompt notice | Report the accident/loss to the insurer promptly |
| Cooperate | Help the insurer investigate, settle, and defend |
| Protect from further loss | Take reasonable steps; keep records of expenses |
| Submit to exams | Physical exam and examination under oath if required |
| Notify police | For theft and hit-and-run |
Exam trap: A material breach that prejudices the insurer (late notice that destroys its ability to investigate) can let the insurer deny the claim. A trivial, non-prejudicial delay usually does not forfeit coverage - the modern rule asks whether the insurer was harmed.
An insured enters her covered auto in an organized track-day speed contest and crashes, damaging the vehicle. How does Part D respond?
Under PAP Part E, which is an ADDITIONAL duty that applies specifically when a covered auto is stolen?
Examinations and appraisal
Two procedural devices show up repeatedly. First, the examination under oath (EUO) and physical exam rights let the insurer test the credibility and extent of a claim; an insured who refuses without good cause can forfeit the claim. Second, the appraisal condition in Part D resolves disputes over the amount of a physical-damage loss (not coverage): each party selects a competent appraiser, the two appraisers select an umpire, and agreement by any two of the three is binding as to the amount. Either party may demand appraisal, but it decides only valuation, never whether the loss is covered.
Why duties matter
The insuring agreement promises payment, but Part E makes that promise conditional. Treat Part E as the bridge between a covered loss and an actually paid claim. On the exam, distinguish general duties (apply to every coverage) from coverage-specific duties (police notice for theft and hit-and-run; protect-from-further-loss and inspection for physical damage). Pair this with the Part D exclusions — racing, public/livery use, wear-and-tear, and unscheduled electronic equipment are the four most-tested denials, and remember that a denial for breach of a Part E duty generally requires the insurer to show actual prejudice from the breach.