7.2 Part D Exclusions and Part E Duties After an Accident
Key Takeaways
- Part D excludes loss to electronic equipment not permanently installed, custom equipment beyond limits, racing, war, nuclear hazard, and damage from wear, freezing, mechanical breakdown, and road damage to tires.
- Loss to a non-owned auto used without a reasonable belief of permission is excluded, as is damage to a vehicle used in the public/livery business such as ride-share for hire.
- Part E requires the insured to give prompt notice, cooperate, protect the auto from further loss, submit to examination under oath, allow inspection, and provide proof of loss.
- Failure to perform a Part E duty that prejudices the insurer can void the claim; the duties are conditions precedent to the insurer's obligation to pay.
- For theft, the insured must notify the police promptly - a separate duty beyond notifying the insurer.
Why Exclusions Matter
No physical damage form is meant to be all-risk in the literal sense. The Part D exclusions carve out exposures that are uninsurable, better handled by another policy, or that require separate underwriting and rating. On the exam, the pattern is consistent: a loss that looks covered under the broad OTC peril is then removed by an exclusion. Always read the loss against the exclusion list before concluding coverage applies.
The exclusions also protect the rating integrity of the book. If wear and tear or mechanical breakdown were covered, every policy would effectively become a maintenance contract, and premiums would have to rise to match. By excluding gradual and maintenance losses, the PAP keeps Part D focused on sudden, accidental, external damage.
Key Part D Exclusions
| Excluded Cause / Property | Reason or Note |
|---|---|
| Wear and tear, freezing, mechanical or electrical breakdown | Maintenance and gradual loss, not accidental |
| Road damage to tires | Excluded unless other parts of the auto are also damaged in the same loss |
| Loss to electronic equipment not permanently installed | Portable devices need separate coverage |
| Tapes, records, discs, and similar media | Excluded outright |
| Custom furnishings/equipment in a pickup or van | Covered only up to the form's sublimit |
| Use in any prearranged or organized racing or speed contest | Increased hazard |
| War, nuclear hazard, radioactive contamination | Catastrophic / governmental exposures |
| A non-owned auto used without a reasonable belief of permission | Removes coverage for taking a vehicle without authority |
| Vehicle used as a public or livery conveyance (for-hire transport) | Commercial exposure; affects ride-share |
Trap: ride-share drivers (Uber, Lyft) face the public-or-livery exclusion while the app is on and a passenger is being carried for hire. The personal auto Part D will not respond - the driver needs a ride-share endorsement or the platform's commercial coverage.
Physical Damage Exclusions in Detail
Part D's exclusions define the edges of collision and other-than-collision coverage. Excluded are wear and tear, freezing, mechanical or electrical breakdown, and road damage to tires (unless caused by a covered peril); loss to electronic equipment and media beyond stated limits; damage to a vehicle used as a public or livery conveyance; and loss from radioactive contamination, war, and nuclear hazard. Damage due to confiscation by government is excluded except for repossession scenarios. These carve-outs explain why an engine that simply fails is not a covered "loss."
Custom Equipment, Diminution, and Towing
Coverage for custom furnishings or equipment in pickups and vans is limited unless declared, and the policy excludes equipment designed for the reproduction of sound only to the extent it is not permanently installed. The base PAP does not pay for diminution in value after repair. Optional endorsements add towing and labor and transportation expenses / rental reimbursement (a daily and aggregate cap, payable after a waiting period for theft losses), which the declarations must show with a premium for the coverage to apply.
Duties After an Accident or Loss
Part E imposes conditions precedent to coverage. The insured must promptly notify the insurer of how, when, and where the accident happened and the names of injured persons and witnesses; cooperate in investigation, settlement, and defense; forward legal papers; submit to physical exams and examination under oath; authorize medical and other records; and, for physical-damage claims, protect the auto from further loss, notify police of theft, and permit inspection and appraisal. Material breach of these duties, where it prejudices the insurer, can defeat an otherwise valid claim.
A covered auto's engine fails because the owner never changed the oil and the engine seized. Which Part D principle applies?
Part E: Duties After an Accident or Loss
Part E - Duties After an Accident or Loss lists the obligations the insured (and anyone seeking coverage) must perform before the insurer is required to pay. These are conditions - if the insured materially breaches one and the breach prejudices the insurer, the carrier may deny the claim. The general duties apply to any loss; additional duties attach to specific coverages.
General duties owed for any loss:
- Prompt notice 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.
- Promptly send copies of any legal papers (notices, summonses) received in connection with the loss.
- Submit to physical exams (for injury coverages) by physicians the insurer chooses, as often as reasonably required.
- Authorize the insurer to obtain medical and other relevant records.
Additional Part E Duties for Physical Damage and UM Claims
When a person is seeking coverage under Part D (physical damage), the PAP adds three specific duties:
- Protect the auto from further loss - take reasonable steps after the loss (e.g., tow a wrecked car, tarp a broken window). The insurer will pay reasonable expenses to do so, but further damage caused by failing to protect the auto is not covered.
- Notify the police promptly if the auto is stolen. This is a duty separate from notifying the insurer; missing it can defeat a theft claim.
- Permit the insurer to inspect and appraise the damaged auto before its repair or disposal so the carrier can verify the loss.
For Uninsured Motorists (Part C) claims, the insured must also promptly notify the police after a hit-and-run and, if suing the uninsured party, send the insurer copies of the legal papers.
Worked scenario: an insured's car is stolen. She reports it to her insurer the same day but never files a police report. The carrier may deny the theft claim because notifying the police is an express Part E duty, and the omission prejudices the insurer's ability to recover the vehicle.
Proof of Loss and Examination Under Oath
Most PAP and homeowners exam questions tie Part E to two recurring concepts. Proof of loss is a sworn statement detailing the loss; the insurer may require it within a stated period (commonly 60 days of request on property forms). Examination under oath (EUO) lets the insurer question the insured separately and under oath, a powerful anti-fraud tool. An insured who refuses a reasonable EUO has breached a condition precedent, and coverage can be denied even if the underlying loss was otherwise covered.
Keep the hierarchy straight:
- A covered peril opens the door.
- An exclusion can close it.
- A failure of a Part E duty can close it even when no exclusion applies.
This three-step analysis - peril, exclusion, condition - is the most reliable way to answer scenario questions on the national portion.
Which of the following is a duty the insured must perform under Part D of the PAP after a physical damage loss?