Property and Casualty Insurance · Casualty Insurance · 7 min read
Auto Exclusions and Accident Duties
- Identify key liability exclusions under Part A of the standard Personal Auto Policy (PAP), including intentional acts, business pursuits, vehicle types, and regular-use situations.
- Explain the insured's mandatory post-accident duties under Part E of the Personal Auto Policy and the consequences of failing to satisfy them.
- Distinguish between automatic Part D transportation expenses coverage and optional rental reimbursement endorsements, including waiting periods and covered expenses.
Key Exclusions Under Part A Liability
Part A liability coverage protects an insured against legal liability for bodily injury or property damage caused by an auto accident. However, standard policies contain specific exclusions designed to eliminate intentional harm, keep commercial risks out of personal policies, and prevent uncompensated exposure for household vehicles.
Under the standard ISO PAP, Part A excludes bodily injury or property damage caused intentionally by or at the direction of that insured. Property owned by the insured or being transported by the insured is also excluded, because liability insurance pays others rather than compensating the policyholder for personal belongings. Property rented to, used by, or in the care of the insured is generally excluded, though an exception applies to a rented residence or private garage. In addition, bodily injury to an insured's employee arising out of employment is excluded because workers compensation or employers liability coverage may address that exposure. A key exception allows coverage for domestic employees if workers compensation benefits are not required or available.
Public or livery conveyance is another critical exclusion. The PAP's public or livery conveyance exclusion generally applies when an insured uses a vehicle to carry people or property for a fee, but you must check the applicable policy wording and endorsements, including any delivery-business provisions. Ridesharing may be excluded under the PAP's public or livery conveyance provision or specific transportation network platform wording; whether merely being logged into an app is excluded depends on the applicable policy and endorsements. A share-the-expense carpool, however, is a recognized exception to this exclusion and remains covered under the standard policy.
Consider a driver who participates in a neighborhood carpool where coworkers split fuel expenses. That driver remains covered under Part A because shared expenses do not constitute carrying passengers for a fee. If that driver uses the car to carry paying rideshare passengers, the public or livery conveyance exclusion may apply; coverage while merely logged into the app depends on the policy's transportation network platform wording.
Common mistakes
- Assuming that transportation expenses are paid only after a total theft; basic Part D coverage also pays after a covered collision or other non-theft loss when the matching physical damage coverage applies, once the auto is out of use for more than 24 hours.
- Do not assume a standard PAP covers ordinary motorcycle use. Part A generally excludes vehicles with fewer than four wheels, subject to its medical-emergency exception; ordinary use generally requires an endorsement or separate policy.
- Carrying the homeowners and CGL voluntary payment condition, with its first aid exception, into PAP Part E, which instead lists notice, cooperation, and proof of loss duties.
- Confusing basic Part D transportation expenses, which apply to covered theft and non-theft losses within stated daily and maximum amounts, with optional extended transportation expenses coverage that raises those amounts; check the applicable form for covered substitute travel costs.
Key points
- Part A excludes intentionally caused injury or damage, specified property owned or transported by an insured, public or livery conveyance use, and bodily injury to an insured's employee arising from employment; the employee exclusion does not apply to a domestic employee if workers compensation benefits are neither required nor available.
- Share-the-expense carpools are covered under Part A, but carrying paying rideshare passengers may be excluded, and coverage while merely logged into a transportation network platform depends on the policy wording.
- Part A contains exclusions for vehicles with fewer than four wheels, specified racing activities, and certain vehicles owned by or furnished for the regular use of an insured, each subject to its applicable policy wording and exceptions, including the medical-emergency exception for vehicles with fewer than four wheels.
- Under Part E, an insured must promptly notify the insurer, forward legal documents, cooperate with the investigation, settlement, or defense, submit to insurer-paid physical exams, and authorize the insurer to obtain medical reports and other records.
- You must promptly notify the police if a covered auto or non-owned auto is stolen, follow any applicable uninsured motorists reporting duty after a hit-and-run accident, and take reasonable steps to protect damaged covered property from further loss.
- Standard Part D automatically provides limited transportation expenses coverage after a covered total theft, beginning after 48 hours, and after other covered collision or other than collision losses, beginning once the auto is out of use for more than 24 hours; an optional endorsement can raise the limits.
- Optional extended transportation expenses coverage generally requires an additional premium and applicable physical damage coverage; eligible substitute transportation costs depend on the endorsement and are not necessarily limited to rental charges.
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