7.2 Exclusions and Part E Duties After an Accident

Part D Exclusions

Part D pays for sudden, accidental physical damage - not for the gradual decline or operating costs of owning a car. The ISO PP 00 01 exclusions remove predictable, maintenance, and catastrophe-class losses:

The Public or Livery Conveyance Trap

The PAP excludes physical damage (and liability) while the auto is used as a public or livery conveyance - that is, carrying passengers for a fee like a taxi. The single named exception is a share-the-expense car pool. Driving for a transportation network company (Uber, Lyft) generally falls within the livery exclusion unless a ride-share endorsement is added or the driver carries a commercial policy. Candidates must know that a casual carpool where riders split gas costs remains covered, but for-hire passenger transport is excluded.

Electronic Equipment

Factory or permanently installed sound and electronic equipment is covered. Aftermarket gear that is not permanently installed - or media (tapes, discs) - is excluded unless added by the Coverage for Audio, Visual and Data Electronic Equipment endorsement, which schedules a stated limit.

Trap: The deductible is flat and applies to each separate covered loss. There is no "diminishing deductible" in the unendorsed PAP, and a single OTC and a single Collision loss in the same incident can each carry their own deductible if both perils contribute.

Part E: Duties After an Accident or Loss

Part E is the administrative heart of the policy: it lists what the insured must do after an accident or loss before the insurer is obligated to pay. These are conditions - failure to perform them can jeopardize the claim. The general duties apply to all coverages; additional duties apply specifically to Part C (UM) and Part D (physical damage).

General Duties (All Coverages)

1. Prompt notice to the insurer - how, when, and where the accident or loss happened, plus the names of injured persons 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, demand, notice) received in connection with the loss.
4. Submit to physical exams by physicians the insurer chooses, at the insurer's expense, as often as reasonably required.
5. Submit a proof of loss when required, and submit to examination under oath.
6. Authorize the insurer to obtain medical records and other pertinent information.

Additional Duties for Part D (Physical Damage)

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

Additional Duty for Part C (Uninsured Motorists)

• Notify the police promptly if a hit-and-run driver is involved, and (where required) send the insurer copies of legal papers if the insured sues the uninsured motorist.

Consequences of Breaching a Duty

A breach - late notice, refusing an inspection, failing to cooperate, hiding the damaged vehicle - can let the insurer deny or reduce the claim. Most modern courts, however, require the insurer to show it was prejudiced (actually harmed) by the breach. On the exam, choose the answer reflecting that the insured must show substantial compliance, and that a trivial, non-prejudicial delay rarely voids coverage outright. The duties exist so the insurer can investigate while evidence is fresh, defend suits properly, and verify the loss amount.

Salvage and Appraisal

When the insurer pays a total loss, it generally takes the salvage (the wrecked vehicle) and may sell it to offset the payment. The insurer may also choose to repair, replace, or pay for the loss in money - the company, not the insured, elects the method of settlement.

If the insured and insurer disagree on the amount of a Part D loss, either party may invoke the appraisal provision: each selects a competent appraiser, the two appraisers select an umpire, and agreement by any two of the three sets the amount. Each party pays its own appraiser and shares the umpire's cost equally. Appraisal resolves the amount of loss only - it never decides whether coverage applies, which remains a coverage question for the courts.

Why the Duties Matter on the Exam

The Part E conditions convert the policy from a promise into an enforceable bargain. The insurer's promise to pay is conditioned on the insured doing these things, so a question that hides a breach (the insured repaired the car before the adjuster saw it, or settled with the other driver privately) is signaling that coverage may be impaired. Read every claim fact pattern for a missed duty before choosing an answer.