7.2 Exclusions and Part E: Duties After an Accident or Loss

Part D Exclusions

Part D contains a long list of exclusions designed to limit moral hazard, commercial exposure, and high-tech-equipment claims. The exam expects candidates to recognize the most-tested ones rather than memorize all of them.

• Public or livery use — using the auto to carry persons or property for a fee (ride-share for hire without endorsement, taxis). Share-the-expense car pools are NOT excluded.
• Wear, tear, freezing, mechanical/electrical breakdown — Part D is not a warranty; it excludes maintenance-type failures unless they result from a covered theft.
• Road damage to tires — excluded unless caused by a covered peril or stolen with the vehicle.
• War, nuclear, radioactive contamination — standard catastrophe exclusions.
• Electronic equipment not permanently installed (tapes, records, custom equipment beyond a small sublimit such as $1,500).
• Government destruction/confiscation and racing/speed contests on a track.

The Non-Owned Auto and Other-Insurance Wrinkles

Part D extends to a newly acquired auto and to a non-owned auto (a temporary substitute or one used with permission), but for a non-owned auto the coverage is the broadest coverage applying to any vehicle the insured owns. If the insured carries OTC but no Collision on their owned cars, the borrowed car gets only OTC.

For other insurance, Part D is excess over any other collectible physical-damage coverage on a non-owned auto, and it shares pro rata by limits when two policies cover the same owned auto. Memorize: owned auto → pro rata; non-owned auto → excess.

Part E: Duties After an Accident or Loss

Part E lists the conditions the insured must satisfy to trigger the insurer's obligation to pay. These are conditions precedent — failure to comply can void coverage for that claim if the insurer is prejudiced. General duties applicable 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 in the investigation, settlement, or defense of any claim.
3. Forward promptly any legal papers (summons, suit) received.
4. Submit, as often as reasonably required, to physical exams (by physicians the insurer selects) and examinations under oath (EUO).
5. Authorize the insurer to obtain medical and other records.

Additional Duties Specific to Coverages

Duties After Loss Timeline (typical reference): notice to insurer is expected promptly; proof of loss within the time the insurer requests; theft to police immediately; the insurer's payment of a physical-damage loss generally follows within 30 days of agreed settlement under many state prompt-pay statutes. The PAP itself does not fix a numeric notice deadline — it uses the word "promptly," a common exam distractor against policies that state "within 60 days."

Appraisal Clause

When the insurer and insured agree there is a covered loss but dispute the amount, either party may demand appraisal. Each selects a competent, impartial appraiser; the two appraisers select an umpire. Agreement of any two of the three (either appraiser plus the umpire) sets the amount. Each party pays its own appraiser and shares the umpire cost equally. Appraisal resolves value, not coverage — a coverage dispute goes to court, not appraisal. This distinction is a frequent trap.

The Public-or-Livery and Business-Use Exclusions

Part D excludes loss to a covered auto while used as a public or livery conveyance (taxi, ride-share without a TNC endorsement) and certain business uses. It also excludes damage from wear and tear, freezing, mechanical breakdown, road damage to tires, and electronic equipment/media not permanently installed — pure maintenance and obsolescence exposures the policy is not meant to fund.

Worked "Owned but Not Insured" Trap

If the insured owns a second car not listed on the policy and it is damaged, Part D will not pay, because the policy covers "your covered auto" and certain newly acquired autos only. The fix is to schedule every owned auto. This pairs with the liability "owned-but-not-insured" exclusion tested in Part A.

Part E Duties Recap

The appraisal clause again resolves only the amount of a physical-damage loss, never whether coverage exists.

How Part D Exclusions and Part E Duties Interact on a Claim

A physical-damage claim is evaluated in two passes. First the adjuster confirms the loss is not within a Part D exclusion such as public-or-livery use, business use of a non-private-passenger vehicle, wear and tear, mechanical breakdown, or damage to an owned auto not listed on the policy. Then the adjuster confirms the insured satisfied the Part E duties: prompt notice, cooperation, forwarding any legal papers, allowing inspection, notifying police on theft, and protecting the vehicle from further damage.

A breach of a duty can bar a claim that would otherwise be covered, which is why the exam pairs the two topics. The appraisal clause again limits itself to the amount of a physical-damage dispute, so a coverage fight cannot be forced into appraisal, and the owned-but-not-insured trap reappears here exactly as it did in Part A liability.