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What Car Insurance Doesn’t Cover

Custom parts? Rideshare driving? We spell out everything your car insurance policy might not cover.

Team LemonadeTeam Lemonade

When you first bought your car insurance policy, you might not have looked too closely at the details. It was something the law required you to have, and you pretty much forgot about it after you signed up. 

But if you get in an accident, suddenly those specific coverage details matter a whole lot. All car insurance policies are not created equally, and it’s good to have a basic grasp of what your own insurance will (and will not) cover.  

Dinosaur attacks, not covered.

So what does car insurance cover? Car insurance policies include various types of coverage, from liability insurance to uninsured motorist coverage, some of which are optional depending on where you live. You can generally customize which coverages you’d like when signing up for a policy, as well as setting your policy limits and deductible. 

What’s covered in each person’s policy will vary, but here are the answers to common questions about car insurance coverage. You can also click here for a quick-and-easy, TL;DR list of things that aren’t covered.

Here’s a few topics we’ll discuss:

Street racing accidents
People who should be on your policy, but aren’t
Theft of your stuff
Intentional damage
Natural disasters
Work-related driving
Rideshare jobs
Routine maintenance
Paying off your lender
Fancy-ass custom parts
Collector cars
Driving outside the U.S.
Electrical issues
Driving between skyscrapers

Does my car insurance policy cover all car accidents?

Collision coverage pays for the repairs to your insured car as a result of a covered accident. That said, your policy won’t cover you if the accident was a result of street racing or another illegal activity. Get that energy out playing GTA, not IRL.

Does my car insurance cover my spouse if they crash my car? 

Basically, yes, but it depends on whether or not they’re listed on your policy. (They should be!)

If a family member who doesn’t live with you borrows your car to go to the grocery store, your policy will cover them, with the same policy limits and deductibles as if you’d been behind the wheel personally. 

Your policy covers all listed cars and drivers, and you can add up to seven drivers to your Lemonade Car policy. Keep in mind that you’re required to include members of your household on your policy, regardless of how much they drive. That means spouses and any licensed or permitted children in the household under 19 must be listed on your policy.

Is it cool to loan your car to a friend who’s not listed on your policy, and would they be covered by your insurance while driving? Yes! But you won’t be covered if it’s someone who should have been listed on your policy but wasn’t. Here’s some more info about who can drive your cars.

Does car insurance cover theft of belongings?

No, your car insurance policy won’t kick in to cover stuff inside the car that’s stolen.

If you leave your antique Japanese sword in the backseat of your Mazda Miata and someone smashes the window and grabs it, you’d file two claims: A vandalism claim under your car insurance’s comprehensive coverage for the broken window, and a theft claim under your renters or homeowners insurance for your missing stuff.

Does car insurance cover intentional damage?

This one’s common sense: Damage done intentionally, whether by yourself or because you told someone else to cause it, isn’t covered (with some very rare and specific exceptions). So if you pay your buddy to come smash up your truck with a baseball bat, hoping to collect from your insurer? That’s just lame. And it’s also insurance fraud. 

Does car insurance cover natural disasters

If you have comprehensive coverage, it will cover at least some natural disasters, like hail, landslides, sinkholes, and other events. In some areas of the country where wildfires, earthquakes, or floods are common, car insurance companies may put exclusions in your car insurance policy. If you have any specific concerns about your policy’s coverages, talk to your insurance provider. 

Freeze and ice damage, however, aren’t considered natural disasters. If your car battery dies from extreme cold, or an electric vehicle charger stops working after freezing, you can’t file an insurance claim.

Am I covered if I’m driving for business purposes?

Nope. We can’t cover you if you use your car as a way to make additional income, or if it’s affiliated with your company or business. If you’re in a car accident and you’re driving your car for business purposes, you wouldn’t file an insurance claim under your own car insurance. You would have to talk to your employer about filing a claim under their liability insurance.

What about if I drive for a ridesharing service?

Bad news. If you’re making your living in the gig economy with a platform like Uber or Lyft, we can’t insure your car. Rideshare insurance isn’t something Lemonade Car offers today, ​​but we’re always working to improve our insurance coverage, so it’s worth checking back in to see if this changes. 

Does car insurance cover routine maintenance? 

No. You’re responsible for getting regular oil changes and rotating your tires (or, you know, having Caliber do it for you). If you file an insurance claim and the adjuster determines that the damage to your vehicle is from normal wear and tear, you’ll have to pay for those repairs yourself.

The same applies to cosmetic issues that may happen over time—for instance, if your nice leather seats become sun-damaged. That would be considered wear and tear that’s not covered by your insurance policy.

Will car insurance pay off my lender if I total a new car

A new car depreciates the moment you drive it off the lot. If you’re in an accident and your vehicle is declared totaled within the first one to two years of owning it, your car insurance payout might not be enough to pay out the lender. 

BTW, Lemonade Car doesn’t offer gap insurance yet, but it’s worth checking back in to see if this changes.

Will car insurance pay to fix or replace custom parts?

If you put more than $1,000 of custom parts into your car and they’re damaged in an accident, car insurance coverage won’t extend to them. This includes bells and whistles like spoilers, or those mufflers that make your car sound faster and scarier than it actually is.

Would car insurance cover my 1965 vintage Mustang?

Again, every insurer is different. But Lemonade Car does not cover classic, antique, or exotic cars.

Does car insurance cover you if you’re driving overseas?

Lemonade Car has you covered when you’re driving in all 50 states as well as Canada. But if you’re on vacation and you rent or borrow a car in Mexico, or Australia, China, or anywhere else, you’ll want to get other coverage. This is usually available through a rental company or your credit card company. 

Does car insurance cover electrical issues?

It depends on the context. Your car insurance wouldn’t cover typical wear or tear, like your Bluetooth speakers malfunctioning with age. But if electronic parts are damaged as the result of a crash or accident, they would likely be covered.  

Asking for a friend: What if I decide to drive my humble Prius at full-speed in order to, you know, sorta leap effortlessly between various enormous skyscrapers in a place like Abu Dhabi. Would car insurance cover the damages I might incur?

Hey, we’re glad you’re so ambitious. And so confident! We don’t know what kind of insurance these guys had, but in the real world, car insurance doesn’t cover the results of over-the-top stunt driving, in the Middle East or elsewhere. Sorry. 

The TL;DR list of some-things-that-aren’t-covered:

  • Accidents that are the result of street racing or stunt driving
  • An accident that happens when the driver is someone who should be listed on your policy—but isn’t
  • Theft of belongings in your car (that would fall under renters or homeowners insurance)
  • Intentional damage you caused to your car (like if you got angry and smashed your own windshield)
  • Damage caused by freeze or ice
  • Anything that occurs if you’re using your car for business (including driving for rideshare companies like Lyft)
  • Routine maintenance, like oil or tire changes
  • Fancy custom parts (over a maximum of $1,000)
  • Classic, antique, or exotic cars
  • Electrical issues not caused by an accident (like normal wear-and-tear affecting your car stereo)

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Please Note: These definitions don’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade. They are intended for educational purposes only - they’re not meant to be used in lieu of professional legal or financial advice. We’ll do our best to keep them updated, but they may not always reflect current industry developments. Feel free to use the terms with attribution (friends don’t let friends plagiarize!)
Insurance provided by Lemonade Insurance Company, 5 Crosby St. 3rd floor, New York, NY 10013 Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, except that Lemonade Life Insurance Agency (LLIA) is acting as the agent of one or more unaffiliated companies that provide life insurance. Both LIA and LLIA receive compensation based on the premiums for the insurance policies each sells. Further information is available upon request.