Car insurance exclusions are a way for insurance companies to more narrowly define what’s covered, and what’s not, in a car insurance policy.
What are exclusions in a car insurance policy?
In most auto insurance policies, the insurance company will list specific exclusions. These are instances where your insurance company won’t provide coverage—like, for instance, if you get mad and decide to drive your car into your local Subway sandwich shop.
In the event of an accident that falls under one of the specific categories we’ll discuss below, a policyholder may be responsible for medical payments, as well as payments for any repairs and damages.
You’ll find exclusions listed in your auto insurance policy. They may vary depending on your insurance coverage; you’ll often find these exclusions in umbrella and excess insurance coverage policies.
As always, it’s important to cozy up in bed, drink a cup of tea, and dig into your policy details. They’re captivating, we promise!
Are exclusions the same as coverage limits?
Nope! An exclusion is totally different from coverage limits, which merely set the limit at which your insurance provider stops paying out on an insurance claim (after you pay any deductibles). If accident-related expenses exceed your minimum limits, liability insurance stops paying out and you have to pay the remainder.
What are common car insurance exclusions?
Insurers commonly put these exclusions in auto insurance policies:
Excluded driver
Also called a named driver exclusion, your insurance company could specifically write this clause into an auto insurance policy if you live with a household member who is a high-risk driver, or if you want to specifically exclude a driver from your policy.
Family member exclusion clause
If two family members are in the insured vehicle and are in an accident, the driver’s liability insurance would not pay out an insurance claim filed by the passenger.
Insurers include this clause to prevent fraud. Otherwise, two family members could work together to cause a car accident and have the passenger collect on the driver’s liability insurance. Sneaky, sneaky.
Not all states allow these clauses.
Intentional act exclusion
This is another clause in liability coverage that voids insurance coverage for injuries or property damage if the insured driver intentionally tries to harm someone or something with their vehicle.
Normally, bodily injury liability insurance covers injuries caused to another person in a car accident. But if you purposefully accelerate to knock down your arch nemesis in a crosswalk, you’ll pay those medical expenses out-of-pocket (which might be tough, considering you’ll also probably be in jail).
Medical payments exclusions
Medical payments clauses help pay for your medical expenses, or a passenger’s, after an accident. But you could find some exclusions in this part of your auto insurance policy. Typically, insurers won’t cover medical payments if you were:
- Driving your own car for business use
- Performing stunts, racing, or engaging in other macho competitions with your car
- Driving the car without the owner’s permission
- Living in your own car when the injuries happened
- Involved in a situation where worker’s compensation would pay the medical expenses
Owned-but-unlisted vehicle exclusion
Do you regularly drive someone else’s motor vehicle? Or, maybe you own more than one car but don’t list your other cars on your auto insurance policy?
Since insurance rates rise the more cars you insure, some drivers might not list all their vehicles when getting car insurance quotes. While it could save them money on insurance premiums, the owned-but-unlisted vehicle clause excludes collision coverage and even liability coverage for that motor vehicle if it’s in an accident.
Here’s an example: Bill owns a 2002 Volvo as well as a 2010 Prius. He buys car insurance for the Volvo and doesn’t mention to his insurer that he also owns the Prius. Well, when Bill accidentally rear ends his neighbor with the Prius the damage to both vehicles won’t be covered since he should have included the car on his policy to begin with.
Act-of-god exclusion
Auto insurance companies put Act-of-god exclusions in car insurance policies to cover acts of nature and other unpredictable events that could damage your car. These include hurricanes, floods, tornados, and all the other calamities the modern world can throw at us.
Acts-of-god exclusions vary, and sometimes the comprehensive coverage in your policy (if you have it) will pay for damages caused by things like hail or vandalism. Comprehensive insurance typically covers damages that aren’t caused by a collision with another car. If you live in an area where natural disasters happen regularly, ask your insurance company about purchasing insurance coverage that includes the specific event you’re worried about.
Punitive damages exclusion
Juries award punitive damages over and above actual damages to punish the driver for their negligence if they were reckless, malicious, or engaged in gross misconduct.
For example, let’s say you get behind the wheel drunk and cause an accident, and also get a DUI. (We know, you’re a good person, but bear with us for the sake of example.) If the other person involved in your crash sues you, the jury could award them punitive damages. If your policy has a punitive damages exclusion, your coverage limits will not pay for any punitive, exemplary, or other expenses awarded because of such damages. So if that DUI caused $50,000 worth of damages to others, your policy would still help pay that claim. But if a jury later awarded punitive damages of $20,000, that would be your out-of-pocket responsibility under this exclusion.