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Car insurance exclusions that could void your claim
Prevent your car insurance claim from being rejected.
This article was reviewed by Andrew Flueckiger, a member of the Finder Editorial Review Board and certified insurance counselor and licensed insurance agent in five states.
If you take a close look at your car insurance policy, you’ll see a long list of exclusions that your insurer won’t cover. If you get into an accident and your claim is related to any of these exclusions, your insurer may reject your claim. Avoid these exclusions for a better chance at a successful car insurance claim.
When would my car insurance claim be denied?
Some drivers may accidentally void their insurance policy without knowing it.
Unapproved drivers took the wheel
You can let nearly anyone drive your car and you’ll have coverage under your policy. But people that have regular access to your vehicle, such as other family members that live in your household, might need to be listed as drivers on your policy to have coverage.
And if the person behind the wheel is listed as an unapproved or excluded driver, your claim could be denied. So if you excluded your teenager from driving your classic car but your kid gets in a wreck while driving it, your insurance likely wouldn’t cover the damage.
You didn’t buy optional coverage
If you don’t have certain types of coverage, your claim would be denied. For instance, you won’t be covered for theft or vandalism if you don’t have comprehensive coverage. If you don’t have collision coverage on an older car and you cause a wreck, your insurance would cover damage to the other car but not the cost to fix yours.
You were driving doing an illegal activity
Don’t plan on having car insurance coverage if you decide to rob your local bank and attempt a speedy getaway. Driving while doing an illegal activity could cause your claim to be denied. Causing an accident with a suspended license or while under the influence of drugs or alcohol could also cause your claim to be denied, depending on the insurer.
You didn’t report the accident in time
Most policies require that you report any damage within a specified amount of time, usually 30 days. You can still usually make a claim even if you didn’t file a police report though.
You were racing
If you get into an accident while racing, even on a private track or unused roads, your damage typically won’t be covered if your insurer can prove you were racing.
You didn’t notify your insurer you were driving for business use
Your personal car insurance policy won’t usually cover you for accidents that happen while using your car for commercial use. This includes carrying goods for pay or using your car as a rideshare service unless you’ve added a commercial or ridesharing option to your policy.
You didn’t pay your premiums
If you haven’t paid your insurance premiums beyond the allowed grace period, your insurance policy can lapse. Your grace period can be between three to 30 days, depending on your insurance provider. A lapsed policy means you no longer have car insurance, and in the case of an accident, you’d have to pay for damages out-of-pocket.
You maxed out your policy limits
If the cost of damage done to your car exceeds your limits, your claim won’t be denied, but you will be responsible for the difference. For example, if you financed a vehicle that’s totaled in an accident, you may get a check for the car’s market value after your deductible, instead of the total amount you owe the finance company.
What’s not typically covered by car insurance?
There are certain types of damage that aren’t covered by most car insurance policies.
- Wear and tear and depreciation. If damage to your car was caused by wear and tear, defined as natural damage expected to occur over time with regular driving, your insurer won’t cover it.
- Mechanical breakdown. Car insurance usually covers damage, not failures. For example, you’re typically covered by insurance if your power windows stop working after an accident but not if they stop working from normal use.
- Deliberate damage. As a general rule, you can’t claim any type of deliberate damage to your vehicle. This is to prevent a common insurance scam where someone destroys a damaged part to get a new replacement part through insurance.
- Personal belongings. You can generally assume that your car insurance doesn’t cover personal belongings. However, your homeowners or renters insurance might cover your belongings.
- Driving outside the US. Typically, standard car insurance will not cover you outside the country. Some policies might have more specific location restrictions or will offer different types of coverage depending on where you are driving at the time.
- Lawful seizure. If your car is lawfully repossessed or damaged during repossession, whether by debt collectors, the police or anyone else, it may not be covered by your insurance.
- Custom modifications. Depending on the terms of your policy, you might not be covered for aftermarket car modifications. Modifications can include custom interiors, stereo equipment, wheelchair lifts and more. You might need to add specific coverage for any car mods to your policy.
What should I do if my claim was denied?
If you are denied a claim, the insurance company must provide a reason. If you believe your claim is valid, you can appeal your denial. Each insurance provider has a process for appealing a denial. Check with your provider to find out the process. You can begin by gathering all of the evidence and documentation to submit to the insurance company.
Another avenue would be to file a lawsuit if your initial appeal is rejected or ignored. Talk to an attorney to find out if your case could hold up in court. You can also contact your state’s insurance department to file a grievance with your insurer.
Shop for car insurance companies with a better claims process
Make sure you understand what’s covered under your car insurance and what’s not covered before hitting the road. This is especially important when canceling policies or switching insurers.
Check your terms carefully to avoid a surprise when it’s time to make a claim, and compare your options to find the best coverage.
Learn more about what’s covered by car insurance
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