Car insurance is there to cushion you against the financial losses associated with unpleasant and unforeseen events such as the theft of your car, an accident that causes damage to your vehicle, and you accidentally damaging someone else’s property.
Most people who understand what their car insurance covers, and follow the terms and conditions of their policy have a good experience when they need to claim. Yet, there are also some misconceptions about what car insurance will cover and what it won’t pay for. In some cases, you can even get other forms of insurance to protect you for the exclusions.
Ernest North, the co-founder of digital insurance platform Naked, lists a few of the eventualities that are excluded from car insurance.
1. Maintenance and wear-and-tear
Your car loses its shine the more and the longer you use it. Components like brake pads, windscreen wipers, and tyres get worn out, and need to be replaced. Exposure to the weather can leave the paintwork looking faded and shabby. And mechanical and electrical parts can fail as they age. These issues are not covered in your car insurance. Some of these may be covered by your vehicle’s warranty or the service plan, but your comprehensive car insurance policy only covers damage from sudden, unforeseen events that involve impact with or by an external object or force.
2. Unauthorised and undisclosed uses of the car
Most personal car insurance policies will not cover you when you use your car for purposes such as leisure racing or being an Uber driver. If you’re planning to take your car for a spin around a racetrack, you might want to check if you’ll be covered or not if something happens. If you are going to be transporting people or goods around in your vehicle as part of your job, you would need to get a commercial insurance policy. The reason for this is that the risks are different, so commercial policies will be more expensive.
3. Unauthorised drivers
This varies by insurance company, but some insurers have strict policies about whether they will pay out a claim if someone who isn’t listed on your policy has an accident in your car. Read your policy carefully and ask your insurer if you need to name each person who drives your car. The Naked Insurance policy covers any driver with a valid driver’s license who uses your car with your permission.
4. Damage caused while doing something illegal
Car insurance policies will generally not cover you when you have an accident while you’re doing something illegal. Examples include driving your car in an unroadworthy condition, driving under the influence of alcohol or drugs, speeding or reckless driving, driving with an invalid driver’s licence, or leaving the scene of the accident unlawfully.
5. False or undisclosed information
Your car insurance may not pay out if there are any falsehoods in the details you provided about yourself or your car when buying insurance. Your claim will also be rejected if you didn’t tell the whole truth in your accident report.
6. Personal belongings damaged or stolen from your car
Car insurance generally only covers the car and the damage it can cause to other people’s property. You will need to purchase separate single items or home insurance cover to insure items like your camera, notebook or smartphone.
7. The money you owe the bank after your car has been written off or stolen
Your car insurance coverage may only cover the value of the car at the time of a theft or accident – not the amount you still need to pay off. You can get shortfall cover to pay for any outstanding debt on your car, but it’s not included by default.