Do you know precisely what your car insurance covers? Aside from the cost of the vehicle itself, insurance can amount to one of our most significant yearly investments. Therefore it’s certainly in your best interest to fully understand exactly what it is you’re paying for.
All insurers require you read through the terms and conditions of your policy, but many of us can find these documents to be complex and don’t always take the time to really read into it. As a result, we have a tendency to simply assume that we’ll be covered for certain things, particularly if we’ve taken on comprehensive cover. You must remember that “comprehensive” doesn’t necessarily mean we’re covered for all eventualities. There will always be exclusions.
1 – Car Payments
Few of us have enough cash floating around to purchase a vehicle without taking some sort of financing option. We’re likely comfortable making our payments each month, but we might not be aware of how a significant accident might affect this. So, imagine the scenario — you’ve had your car insurance loan for a couple of years, but you’ve been involved in a collision so serious that your insurer considers your car to be a write-off. Your insurer will cover your remaining loan payments, right?
Unfortunately, this is not necessarily the case. When a vehicle is written off, your insurer bases their settlement decision on the current market value of the vehicle, taking into consideration wear and tear, and depreciation. Cars depreciate quickly, as soon as they leave the showroom floor. This means that in some cases the amount your insurer pay in settlement might not be enough to cover your remaining loan amount. As a result, you would still be liable to continue making payments on a car that you can no longer drive.
2 – Other Drivers
It can be confusing at times to understand whether it is the driver who is the subject of an insurance policy, or their vehicle. After all, insurers ask for a significant amount of information regarding the car you intend to drive, its age, how it’s going to be used — and this certainly factors into decisions that are made regarding policy premiums. Some of us may think that this means it is the vehicle that is insured, and therefore anybody who drives it is covered.
Unfortunately, this is not the case. While the type of vehicle might affect the level of risk that the insurer is taking by covering you, each driver must either have their own insurance or be named on your policy. This includes other family members, too. When taking out a new policy, bear in mind that providers such as Travelers Insurance take into account the driving records of all people on the policy when determining premiums. If you intend to let someone with a poor history drive your car, it’s worth considering how this may affect your policy.
3 – Wear and Tear
As soon as your car leaves the showroom floor, it immediately starts to depreciate in value. This is largely due to the fact that every time the vehicle is used, its components are subject to wear and tear. Even if you’ve purchased the hardest-wearing tires or the best car battery on the market, there is no avoiding the fact that your car is in a state of gradual decline. This can result in the potential for components to fail, and your vehicle to breakdown.
You might think, as deterioration is guaranteed and not usually any fault of your own, that your insurance policy would cover costs. Unfortunately, this isn’t the case. In the vast majority of cases, your car insurance won’t extend to cover any repairs or replacements that are required as a result of wear and tear.
Therefore, it’s certainly in your best interest to take steps which can limit problems caused by deterioration. Regularly change your oil, learn how to jump-start your car in emergencies, keep spare tires close to hand.
4 – Business Driving
If you’re undertaking regular trips purely in the interest of a business — such as door-to-door sales, or regular journeys to visit clients — this is often excluded under personal auto cover. By the same token, the gig economy is rising in popularity, with many private drivers taking a side job with ride-share services such as Uber. This would also be considered business use, and any accidents which occur during your travels would not be covered under your policy.
It’s not just important to understand what you need to inform your insurer after an accident, you need to know that there are things they need to know before a policy is issued. Be clear about your intended use for the vehicle, and they can provide you with the best advice about your options — including dedicated business insurance.
5 – Personal Belongings
Our cars aren’t just tools for us to get from A to B; often they are an essential aspect of our family lives. We use them to go on vacation, we make them a part of our everyday routine. As a result, we often fill them with personal belongings — whether these are items we know we’ll need when we’re out and about or those we’ve simply forgotten to bring into the house after a long day. This means that when our vehicles are stolen, there could be a good chance that thieves will also be obtaining some of our personal effects.
Unfortunately, the majority of car insurance policies won’t extend to include personal belongings that have been left inside vehicles. We might find this surprising as it is so common to leave items in our cars, but as they don’t form an essential part of the vehicle, they do not fall under auto insurers’ responsibility. However, many home insurance policies will include a certain amount of coverage for personal belongings taken outside of the home.