Insurers can refuse to provide pay-outs to drivers who they think have been reckless in one way or another. But while most of us can probably name some of the things we know insurers are unlikely to cover, there are also a number of less obvious reasons that car insurance claims may be denied.
If you don’t want to find yourself with no car and no money to repair or replace it, don’t forget about the following 10 lesser-known car insurance exclusions.
1) The driver at fault isn’t on the policy
If your car is involved in an accident and the person driving was not listed as a driver on the insurance policy, the claim can be denied. Sometimes insurers may choose to pay claims in cases where the insured driver has lent their vehicle to a friend or colleague however this is not a given and if someone (such as your partner or a relative) is going to be driving your car frequently or lives at the same address, you typically need to make sure they are listed as a nominated driver.
2) It’s an unroadworthy car
If you’re driving a car that has worn tyres, or is vulnerable to mechanical failure (e.g. the brakes aren’t working properly), or has engine problems (e.g. dodgy transmission) and something goes wrong, your claim may be denied. In fact, it could be denied even if the incident had nothing to do with the unroadworthy state of your vehicle.
3) It’s a modified car
Fairly or otherwise, most insurers view enhanced vehicles as risky. Whilst minor modifications such as adding a tow bar will typically be covered, even something as innocuous as a custom paint job or powerful stereo could result in your car being classified as modified. Either way, it’s generally a good idea to report any modifications to your insurer to check if they will be covered. If you fail to report a proposed modification, you may risk not being covered should an accident occur.
4) It's an overloaded car
Moving house? If you pack your car to the max, you’re not only increasing your chances of coming to grief on the road, you could also be handing your insurer a get-out-of-jail-free card. Australia's states and territories typically have laws against loading up a vehicle in a manner that prevents the driver from viewing traffic or safely controlling the vehicle (due to the amount or distribution of weight in it). If this has been deemed the case with your loading, not only would you be breaking the law, but you could void your insurance.
5) It’s pulling an overloaded trailer
Sadly, nipping down to Kennards to hire a trailer won’t necessarily make that big move any safer. Towing a trailer overflowing with couches, fridges and wardrobes can be at least as dangerous as driving a car packed to the gunwales with big-screen TVs and garbage bags full of clothes. Be aware that trying to save an extra round trip on moving day by piling a trailer high could have expensive consequences.
Be aware there is both a maximum legal weight a trailer can carry and a maximum weight (aka Tow Ball Load) a loaded trailer can place on the tow bar of your vehicle. You’ll need to stay under both these limits.
6) Using the wrong fuel
Insurers most likely won’t pay out if you or someone else damages your engine by using the wrong fuel. This seems to happen most often when people switch from driving a petrol to a diesel vehicle, or borrow a friend’s car.
7) You’re driving for Uber
Before you start moonlighting as an Uber driver, check whether your existing policy covers you. If it doesn’t, you might want to hold off taking any fares until you’ve switched to a policy that does.
8) Legal drugs are a factor
You’re no doubt aware that if you drive while drunk or affected by illegal drugs, your insurer can – and almost certainly will – refuse to pick up the tab for any damage you cause while under the influence. But did you know that using everyday medications (think cold-and-flu tablets, sleeping pills, painkillers, anti-allergy medicines) that affect concentration, reaction times or coordination can also result in your insurance being voided?
9) Too fast, too furious
Insurers generally only provide cover when vehicles are being driven in standard circumstances. If you decide to see how your car performs in a four-wheel-drive adventure park or on a (permanent or temporary) racetrack or to take part in an endurance race or even just a hill-climb challenge, you could well be on your own.
10) You’ve been robbed
Admittedly, this is a grey area. If you have comprehensive or third-party property, fire and theft insurance, you should be compensated if someone smashes a window and nicks your iPhone X from the glovebox, or if the car gets destroyed in a collision. That’s the good news. However, it is worth keeping in mind that most insurers have exclusions around not securing your car effectively (such as forgetting to lock it or leaving windows ajar) or leaving possessions in plain sight. Many also have relatively low caps (think $500-$750) for personal valuables. Once you take into account losing your no-claim bonus, it may not be worth even making a claim.
Bear in mind that different policies may have different exclusions, so it can be a good idea to read the PDS carefully or contact the insurer when comparing car insurance, to help ensure you know what you’ll be covered for.
By Mitch Watson
Mitch Watson is Group Manager of Research and Ratings at Canstar. He has been working in finance research for over 10 years. Over this time he has developed a deep understanding of financial products and what consumers and businesses need to be looking for to get ahead.
Disclaimer: This advice is general and has not taken into account your objectives, financial situation, or needs. Consider whether this advice is right for you. Consider the product disclosure statement (PDS) before making any financial decision. For more information, read Canstar’s Financial Services and Credit Guide (FSCG).