Common Exclusions from Auto Insurance Policy Coverage

It is important for policyholders to understand that car insurance policies have limitations and exclusions. These exclusions are put in place by insurance companies to define the scope of coverage and to ensure the overall sustainability of the insurance system. This article aims to shed light on common exclusions found in auto insurance policies, explaining their purpose and providing examples. Additionally, it will offer guidance to policyholders on how to avoid having their policy voided or claims denied.

  1. Intentional acts: Automobile insurance policies typically exclude coverage for damages resulting from intentional acts. This includes any deliberate or criminal activities such as racing, vandalism, or driving under the influence of drugs or alcohol. These exclusions protect insurance providers from liability arising from actions taken knowingly by the policyholder.

Example: If a policyholder intentionally causes damage to their own vehicle during a fit of anger, the insurance company is unlikely to cover the repairs.

  1. Wear and tear: Coverage for normal wear and tear, mechanical breakdowns, and maintenance expenses are generally excluded from vehicle insurance policies. These are considered to be part of the routine upkeep of a vehicle and are the responsibility of the owner.

Example: If a policyholder’s engine fails due to lack of regular maintenance, the insurer will not cover the cost of repairs.

  1. Personal belongings: Car insurance policies do not typically cover personal belongings that may be stolen or damaged in a vehicle. Items such as laptops, cell phones, or clothing are considered separate from the vehicle and fall under homeowners or renters insurance.

Example: If a policyholder’s laptop is stolen from their car, the auto insurance policy will not provide coverage for the lost item.

  1. Commercial use: Many personal auto insurance policies exclude coverage for accidents that occur while the vehicle is being used for commercial purposes. This includes ridesharing services or delivery jobs. Separate commercial vehicle insurance is required for such activities. At times, some companies may agree to include certain business use of a personal vehicle and in some states certain activities as part of your work may be considered acceptable use. So, you need to check with your insurer and check state rules if you are using your vehicle for things that can be considered business use.

Example: If a policyholder gets into an accident while delivering packages for a delivery service, their personal car insurance policy is unlikely to cover the damages.

  1. Racing or competitive events: Participating in racing or competitive events, including organized races or speed trials, is typically excluded from coverage. These activities involve a higher risk of accidents and are not considered within the scope of a standard auto insurance policy.

Example: If a policyholder’s vehicle sustains damage during a track race, their vehicle insurance policy will not cover the repairs.

  1. Non-permissive use: Auto insurance policies generally exclude coverage for accidents that occur when someone other than the policyholder or authorized drivers use the insured vehicle without permission. In such cases, the person using the vehicle may be responsible for any damages incurred.

Example: If a policyholder’s friend borrows their car without permission and gets into an accident, the policyholder’s insurance is unlikely to cover the damages.

  1. Policy specific exclusions: At times, there may be specific exclusions to your policy. This will clearly be noted on the policy documents.

Example: If you excluded a driver from your policy, it is clear that your carrier will not pay for any damages and liabilities caused by the excluded driver.

Avoiding Policy Voidance or Claim Denials:

Reviewing one’s automobile insurance policy thoroughly is of utmost importance for policyholders. By doing so, they can familiarize themselves with the coverage limits, exclusions, and exceptions contained within the policy. The significance lies in the fact that discovering activities or damages not covered by the policy when filing a claim can prove to be a regrettable realization, underscoring the importance of proactive examination.

  1. Follow the terms and conditions: Policyholders should adhere to the terms and conditions outlined in the policy, such as providing accurate information, notifying the agent or provider promptly of any accidents or incidents, and maintaining a valid driver’s license.
  2. Regularly update the policy: It is essential to inform your insurance company about any changes in your details like moving home or another driver moving into your home. Normally, vehicle insurers need to know about everyone in driving age and living with you so that they can rate the driver.
  3. Vehicle modifications: Also you need to inform the company of any modifications made to your vehicle or alterations in its usage. In many cases, modifications need to be officially recorded on the policy through a rider, and there may be an additional premium to be paid. For instance, if you have made substantial enhancements to your vehicle, such as upgrading the engine or modifying suspensions, it is crucial to inform your car insurer about these changes. Neglecting to update your policy with such information may lead to exclusions or even voiding of the policy, emphasizing the importance of keeping your insurer informed about any relevant updates.
  4. Consider additional coverage: If engaging in activities excluded from the standard policy, explore obtaining separate coverage or riders that cater to specific needs, such as business use or custom parts and equipment endorsement.

In conclusion, while auto insurance provides valuable protection it doesn’t cover everything. It is essential for policyholders to understand the common exclusions within their policy. By being aware of these exclusions, policyholders can take necessary precautions, avoid policy voidance or claim denials, and make informed decisions about additional coverage when needed. Always read and understand the policy terms, update the policy as necessary, and comply with the requirements to ensure the maximum benefits from an auto insurance policy.