What Are Exclusions in Car Insurance?


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Have you ever heard of car insurance exclusions? While most of us tend to focus on the inclusions and benefits of our insurance policies, understanding the exclusions is just as important! By doing so, you can prepare yourself for potential gaps in your cover and make better informed decisions about your insurance needs.

In this blog post, we delve into the world of car insurance exclusions, shedding light on what they are, why they exist, and why it’s important to get to know yours. Whether you’re a seasoned driver or a newly minted license holder, this guide aims to provide good info to help you navigate the ins and outs of your car insurance policy.

A row of cars. Their insurance may include Car insurance exclusions

What are car insurance exclusions?

So, what’s this element of insurance all about? Exclusions in car insurance refer to specific situations, circumstances, or events that aren’t covered by your insurance policy. These vary depending on the insurance provider and the specific policy. It’s clever to review the terms and conditions of your policy to understand the exclusions that apply to you.

Here are some common exclusions that are often found in car insurance policies:

Intentional acts

This refers to damages caused intentionally to your car, such as purposefully causing an accident, or driving under the influence of drugs or alcohol (also sometimes called a car insurance alcohol exclusion).

It’s like insurance’s way of saying, “Nope, we’re not covering any damages caused by your crazy antics.” So, if you decide to purposefully crash your car or go for a joyride under the influence, you’re on your own, my friend.

Racing or reckless driving

Most insurance policies don’t cover damages that occur while the insured vehicle is used for racing, speed tests, or any other form of reckless driving. Insurance companies aren’t fans of high-speed adventures or hair-raising manoeuvres (defensive driving is more our jam).

So, any damages that happen during your race against time won’t be covered.

Car accidents happen unexpectedly no matter how safe you are. Car insurance exclusions can affect your cover

On a serious note, especially given the section above, read our What to Do After a Car Accident article.

Commercial use

If your personal car insurance policy specifically excludes coverage for commercial use, any accidents or damages that occur while using your vehicle for business purposes may not be covered. Keep an eye out for this one if you’re planning to turn your ride into a money-making machine.

Wear and tear

Your car insurance isn’t a magic wand that fixes every scratch or mechanical breakdown. Regular wear and tear, breakdowns, or damages caused by neglecting your car’s maintenance are usually left out of the coverage. So, if your car’s in need of some TLC, it’s time to dig into your own pocket.

Damage during unapproved use

Planning to lend your car to your 16 year old L-plater cousin or let your reckless friend borrow it? If they end up wrecking it, you might find yourself without coverage. Insurance companies want you to stick to the rules, so any damages during unauthorised joyrides are a no-go. Be very mindful of the agreed-upon terms between you and your insurer.

Here’s a valuable read for you: An Unlisted Driver Crashed My Car: What to Expect.

Many car insurance policies don’t cover unlisted drivers – whether they’re at fault or not. Car insurance exclusions can affect your cover

War or acts of terrorism

Damages caused by wars, acts of terrorism, or civil unrest often fall outside the coverage zone. We’re talking about events that are way beyond your control. If your car gets caught up in a warzone or a Godzilla-sized monster attack, your insurance company won’t be liable.

Excluded drivers

Insurance policies may specifically exclude certain individuals from coverage. This includes drivers with a history of accidents or a suspended license. If an excluded driver causes an accident, the insurance may not provide coverage.

If your policy specifically says that Uncle Bob or your cousin Sally can’t drive your car because of their terrible driving record or a suspended license, then any accidents they cause won’t be covered. Sorry, Unc, but you’re on your own!

Car insurance exclusions include other specific events

Certain policies may have additional exclusions, such as damage caused by natural disasters (e.g., floods, earthquakes) or damage resulting from the use of the car in off-road or hazardous conditions.

At PD Insurance, we’re about cover that’s understandable and transparent. If you’d like to check out our car insurance exclusions, search for the “General Exclusions” section of our Policy Disclosure Document.

car crash with red 4x4 and white car. If you crash your car with an expired drivers licence you insurer might not cover your claim

Why do car insurance exclusions exist?

The rationale behind exclusions is comprehensive. A big part of it is that insurance providers need to protect their ‘risk ratio’ from people who aren’t careful with their big ticket possessions and keep their premiums affordable for their customer collective.

Here are some key reasons why exclusions are incorporated into car insurance policies:

Car insurance exclusions reason #1: Risky business insurance

Insurance companies are like cautious superheroes, always on the lookout for trouble. They want to avoid sneaky situations where people might intentionally cause accidents or do crazy things. By excluding intentional acts and reckless driving, they ensure that insurance is for genuine mishaps, not mischievous shenanigans.

Car insurance exclusions reason #2: Price tag predicament

Now, imagine if car insurance covered absolutely everything. Each insurer’s payouts would become unmanageable, and premiums would be super pricey. Insurance providers want to keep things affordable for us so they focus on covering the most common risks and leave out the more unusual / rare situations.

The money writes with white chalk is on hand, draw concept. Car insurance exclusions can affect your cover

Car insurance exclusions reason #3: Coverage clarity

Ever had a friend who borrows your favourite sweater without asking and then spills mustard all over it? Yeah, insurance companies want to avoid situations (kinda) like that. Exclusions make it crystal clear who is covered and under what circumstances. If your policy specifically excludes your dad from driving your car because he has a lead foot, it’s like putting a neon sign on your insurance saying, “Hands off, Pops!”

Car insurance exclusions reason #4: It’s a wild world out there

Insurance companies can’t predict every wild event that might occur, nor the severity of them. So, when it comes to natural disasters, wars, or alien invasions (hey, you never know), they’ll often draw the line and say, “Sorry, folks, this one’s not on us.”

Want to become even MORE insurance savvy? Check out these pieces:

Value-rich car insurance when you need it most

When you have car insurance, you and your family are protected against financial losses (except if you run into the car insurance alcohol exclusion and so on). PD Insurance offers great value car cover – with a flexible excess, additional benefits, and more available to you, you might be saving valuable dollars by going with us. 

Why not get a comparative quote? Comprehensive car insurance doesn’t have to cost a fortune; you’ll see.

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