Poppe Law Firm®

Justice Plaza 8700 Westport Rd, Louisville, KY 40242

(502) 895-3400

(855) 864-8949

Surprising Car Insurance Exclusions

Car insurance and car accidents can be confusing, stressful, and not fun to think about. However, here at the Poppe Law Firm, we stress the importance of understanding car insurance policies and exactly what they cover. The purpose of purchasing car insurance is to provide financial protection when a car (or other vehicle) accident causes bodily injury or property damage. Every single state requires some sort of demonstration of financial responsibility in case of a car accident. In most states, car insurance is mandatory to drive legally (the only exceptions are New Hampshire and Virginia, which require other proof of sufficient funds or a payment of a fee).

The basic car insurance we purchase covers a lot of the potential perils we face while driving. However, these insurance policies contain exclusions and limits. Exclusions are the circumstances in which your car insurance policy will not provide coverage for the bodily injury or property damage that occurs following a collision or accident. Limits are the maximum amount the insurance company will pay, regardless of the actual damage. Some of the typical exclusions may surprise people.

  1. Theft of personal belongings from the car

Comprehensive auto coverage insures against damage to your car caused by instances other than collisions and would likely cover the cost to repair or replace your car if the car itself is vandalized or stolen, subject to limits and your deductible. However, the personal belongings stolen from a car—or entirely lost in the case of a stolen car—are not covered. So, if your window is smashed and somebody steals items from your car, your comprehensive auto coverage would likely pay for the cost of the broken window but not for the value of the stolen items.

Thankfully, if you have homeowners or renters insurance, the contents coverage in that policy would likely cover the stolen items.

  • Custom parts and equipment

Car insurance policies generally cover the basic equipment for your cars make and model, but exclude custom equipment you’ve added. Thus, items such as detachable stereo equipment, custom seats/interior, and custom rims, grilles, exhausts, and spoilers are not covered. Wheelchair lifts and equipment for individuals with disabilities are generally not covered under a basic policy. Purchasing coverage specifically for these custom or add-on parts is an option.

  • Damages incurred while using car for business or commercial purposes

Your basic car insurance policy will likely not cover your car if you are using it for business purposes, such as driving for a ride-sharing app or a delivery service such as DoorDash. Even if you only use your car for business part-time, its important for you to consider a commercial auto policy to cover your car, business, and personal assets. Ride-sharing apps such as Uber and Lyft usually provide rideshare insurance while actively using the app. Importantly, if you fail to notify your regular car insurance that you are also using your car for business and they become aware, they may cancel or refuse to renew your personal car insurance policy.

  • Non-named drivers of car

A common exclusion is non-covered drivers. If a person does not have permission to use your vehicle, that driver is generally excluded from your car’s insurance policy. If you live with a high-risk driver, your insurance may require you to specifically exclude that driver, and coverage will not apply while they are driving. However, depending on the state, giving a driver (not specifically excluded) permission to use your vehicle may or may not result in coverage in the event of a collision or accident. Kentucky courts follow what is called the “initial permission” rule. Thus, in Kentucky, as long as you give permission for a person to use your vehicle, any subsequent use of the vehicle, even if for a different purpose, is likely covered by your policy. Thus, if you allow a friend to drive your car, but tell your friend their child cannot also drive the car, your policy would likely still cover an accident even if the child you did not give permission to drive was driving. This can affect your premiums so be careful who you allow to drive your car.

  • Certain vehicles excluded from coverage

Certain vehicle types are excluded from basic auto insurance policies. Motorcycles, ATVs, and RVs are generally excluded from car insurance policies. However, when you insure your vehicle you have to provide the make and model of the vehicle, so an insurance agent can help you procure specific insurance for those types of vehicles.

  • Driving outside the U.S.

Most basic car insurance policies exclude coverage if you are involved in an accident outside of the United States. Its important to discuss with your insurance agent what is covered and what is not covered if you are driving in another country.

  • Car Financing Gap

If you are financing your car and it gets stolen or completely totaled, your car insurance will likely pay the actual cash value of your car right before the loss. That means, if your car is worth less than what you owe on your car loan, you will be responsible for the difference. This usually happens when a person puts down a small down payment and has a long loan period, thus slowly paying down the principal amount owed. Gap insurance is available to pay for the difference between the value of your car and the loan balance remaining.

  • Racing

Basic car insurance policies exclude coverage if the driver is racing the vehicle. Specific racecar insurance is available.

  • Catastrophic Events

Most policies contain exclusions for extraordinary events such as nuclear explosions, war, sinkholes, and radioactive contamination. While damage from these events is unlikely, its important to read the exclusions in your policy to at least know what they are.

The Poppe Law Firm handles car wrecks, commercial vehicle accidents, semi-truck collisions, and insurance bad faith. If you or a loved one are involved in an accident, do not hesitate to contact us at the Poppe Law Firm.

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