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

Part D exclusions

Physical-damage coverage is broad, but the PAP lists specific exclusions that examiners test heavily. The most commonly tested Part D exclusions are:

• Wear and tear, freezing, mechanical or electrical breakdown, and road damage to tires — these are maintenance losses, not accidents. (Tire damage is covered if caused by a covered peril such as vandalism.)
• Loss to a vehicle used to carry persons or property for a fee (livery), other than a share-the-expense car pool.
• Loss due to radioactive contamination, war, nuclear hazard, or destruction by a governmental authority.
• Loss to electronic equipment that reproduces sound/video/data and is not permanently installed, beyond the stated allowance, and to media/tapes.
• Loss to a non-owned auto used without a reasonable belief of permission.
• Custom furnishings or equipment in a pickup or van unless described.
• Loss to awnings, cabanas, or trailer equipment used with a trailer.
• Loss to a covered auto leased or rented to others.

Diminishing-deductible and clarifying notes

The freezing exclusion does not apply if the insured used reasonable care to protect the vehicle. The mechanical-breakdown exclusion does not apply to a covered theft of the vehicle. These carve-backs are favorite exam distinctions: a stolen car later found with engine damage is still covered, but a car that simply suffers a blown transmission is not.

When two deductibles could apply because a single event triggers both Collision and OTC features, the PAP applies only the higher single deductible, not both stacked. Examiners frequently test that the insured never pays two deductibles for one loss occurrence.

Part E — Duties After an Accident or Loss

Part E sets the conditions the insured must satisfy for any claim under any coverage. Performance of these duties is a condition precedent — failure that prejudices the insurer can void the claim. The general duties are:

Additional duties for Part D and UM claims

For a Part D physical-damage claim, the insured must also:

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

For a uninsured/underinsured motorist (Part C) claim involving a hit-and-run, the insured must promptly notify the police and, within the policy's time limit, send the insurer copies of legal papers if suit is brought. Missing the police-report duty after a hit-and-run is the classic reason a UM claim is denied.

Why duties matter

Duties exist so the insurer can investigate while evidence is fresh, control the defense of liability suits, and prevent fraud. An insured who repairs or disposes of a damaged auto before the adjuster inspects it can have the physical-damage claim reduced or denied because the breach prejudiced the insurer's ability to verify the loss. Producers should counsel clients to photograph damage, keep receipts, and avoid admitting fault at the scene, since cooperation and accurate reporting are policy conditions, not courtesies.

Electronic Equipment, Wear, and the Sound-System Limit

Key Part D exclusions remove wear and tear, freezing, mechanical/electrical breakdown, and road damage to tires (unless caused by a covered peril such as theft or vandalism), plus loss to a vehicle used as a public/livery conveyance. Custom electronic equipment and media not permanently installed are excluded or sublimited; permanently installed sound/navigation equipment is covered, but tapes, discs, and similar media are excluded. Government destruction or confiscation and war/nuclear losses are also excluded.

The Insured's Duties — and the Consequence of Breach

Part E obligates the insured to promptly notify the insurer (how, when, where), cooperate in the investigation and any suit, forward legal papers, submit to examination under oath and physical exams when reasonably required, authorize medical and other records, and submit a proof of loss. For physical-damage claims the insured must also protect the auto from further loss, permit inspection/appraisal before repairs, and report theft to police. Material failure to satisfy these conditions can be grounds for the insurer to deny the claim.

Racing, Non-Owned Business Use, and the Two-Deductible Trap

Part D also excludes loss while the covered auto is in a prearranged racing or speed contest, and damage to a non-owned auto used in the insured's business of selling, repairing, servicing, storing, or parking vehicles (the garage exposure belongs on a commercial policy). When both collision and comprehensive losses arise from one event involving two covered autos, the insured may face the deductible on each vehicle. Knowing which losses are comprehensive (no collision deductible logic) versus collision keeps these settlement questions straight.