12 Things Your Car Insurance Doesn’t Cover

By Catherine Brock

Car insurance can protect you financially from accidents, theft, vandalism, and extreme weather — but your coverage can also leave you exposed to car-related costs you might not expect.

If you aren’t familiar with which situations aren’t covered, known as exclusions, you could get caught off guard by claims denials.

Here are 12 things standard car insurance doesn’t cover, followed by a look at the main types of car insurance and how they can leave you without financial protection.

1. Intentional damage

Car insurance doesn’t cover damage that results from intentionally driving your car into someone or something. An intentional act is something done deliberately with the goal of inflicting harm.

Liability car insurance generally covers damages caused to others by your driving mistakes, like texting behind the wheel or forgetting to look before changing lanes.

2. Mechanical and electrical breakdowns

Mechanical and electrical breakdowns can arise suddenly and prevent your car from operating safely. When these failures happen in the absence of a covered incident, standard car insurance won’t help with the repair costs.

If you want coverage for breakdowns, look into an extended warranty, vehicle service contract, or mechanical breakdown insurance. Know that these policies can also have many exclusions, so be prepared to read the fine print.

3. Maintenance and service costs

Car insurance also doesn’t cover oil changes and recommended service appointments. These and other maintenance items are your responsibility as the car’s owner.

You may be able to buy a prepaid maintenance package from your auto dealer or car maker. These vary in price, terms, and value, but can help you cover some maintenance costs.

4. Personal belongings

“Anything not bolted down, like laptops, purses, or golf clubs, isn’t covered under your auto policy if stolen or damaged,” said John Espenschied, agency principal at Insurance Brokers Group.

“That falls under your homeowners or renters insurance. The smart move is to file a claim there, but only if the loss is significant — otherwise the deductible usually eats up most of it.”

5. Racing or competitive driving

Racing or driving competitively at any organized event is also excluded from your car insurance. The language in your policy may designate timed events, competition locations, high-performance driving, or something similar as racing. Generally, you can interpret this to mean your insurance will deny claims resulting from track days, rallies, drag racing, and autocross activities.

6. Using the car for illegal activities

Exclusions for criminal acts are also common in auto insurance policies. This language discourages illegal behavior and limits the insurance company’s liability, should you decide to rob a bank or lead police on a high-speed chase using your vehicle.

7. Using the car for business

Insurance companies price business policies differently from consumer policies because commercial use of a vehicle has a different risk level. For that reason, a standard consumer policy usually excludes coverage when the car is used for business.

Depending on the type of business, your insurance company may allow you to add special coverage, called an endorsement, that extends protection for business driving. If that’s not an option, you may need separate commercial and personal policies.

8. Excluded drivers

Drivers not listed on your auto policy are typically covered for occasional and permissive use. However, if your policy names any driver as “excluded,” your insurance doesn’t apply when that person is behind the wheel.

Keep in mind that explicitly excluding a driver must be done by the main policyholder.

9. Overloading and other gross negligence

Overloading, or carrying too much weight in your car, can lead to tire strain and damage to the transmission, suspension, and brakes. If an unexpected tire blowout happens due to overloading, and you damage your car or someone else’s, your insurance company could deny the claim.

Towing over the vehicle’s capacity or putting diesel in a gas engine may also be deemed gross negligence by an insurance company.

“Insurance is designed for accidents, not avoidable blunders,” explained Espenschied. “I’ve even seen claims denied because a driver left the sunroof open during a storm — technically ‘negligence.’ The rule of thumb is: If a reasonable person wouldn’t do it, your insurer probably won’t cover it.”

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10. Undeclared custom upgrades

Fancy rims, custom entertainment systems, performance upgrades, and one-of-a-kind paint jobs are also not covered by standard car insurance. Many insurance companies will extend your coverage to custom upgrades upon request and for an additional cost, however.

Espenschied recommended asking your agent about a custom parts endorsement once you’ve spent more than $1,000 on aftermarket parts.

11. Losses above policy limits

Car insurance has stated limits. For example, liability coverages are capped by stated dollar amounts, and comprehensive insurance and collision insurance pays out up to your car’s value.

You are responsible for losses that exceed any policy limit. The biggest risk you face as a driver is in the area of liability. An accident that causes catastrophic injuries to someone else can easily exceed the capacity of a minimum liability policy.

12. Deductibles

Car insurance deductibles, by definition, are your financial responsibility. These are amounts you pay first before your insurance company funds any repairs. Comprehensive and collision coverages, which pay to fix your vehicle in different situations, have deductibles.

However, if you’re found not at fault for an accident, your insurance company might attempt to get your deductible back through a process called subrogation.

-Yahoo Finance