You’ve got car insurance– great! But as a savvy consumer, you know the devil’s in the details. Standard policies offer essential protection, but they leave some significant gaps. Understanding these exclusions can save you from unexpected costs and help you decide if extra coverage is right for you.
Breaking Down a “Standard” Car Insurance Policy
Before we dive into what’s not covered, let’s quickly touch on what we mean when we talk about a standard car insurance policy. For most drivers, this is a “full coverage” policy, which consists of comprehensive, collision, liability, and other mandatory coverage types:
- Comprehensive coverage: Protection for your car against things other than collisions with another vehicle or object. This can include damage from theft, vandalism, fire, hail, falling objects (like trees), and even hitting an animal.
- Collision coverage: For when your car is damaged as a result of a collision with another vehicle or object. It doesn’t matter who was at fault. Whether you backed into a pole or another driver ran a red light and hit you, collision coverage can help pay for the repairs to your vehicle.
- Liability coverage: Essential coverage that’s legally required in most states. It helps protect you financially if you are found responsible for an accident that injures someone else or damages their property. It has separate coverage limits for bodily injury liability (per person and per accident) and property damage liability.
- Uninsured/underinsured motorist coverage: Coverage that protects you and your passengers if you’re involved in an accident caused by a driver who either doesn’t have any insurance (uninsured) or doesn’t have enough insurance to cover all the resulting damages (underinsured). It can help pay for your medical bills, lost wages, and other related expenses in these situations.
- Medical Payments (MedPay): Helps pay for the medical expenses of you and your passengers who are injured in a car accident in states where it’s available, regardless of who was at fault. It can help cover immediate medical costs like doctor visits, hospital stays, and even funeral expenses. It often has lower coverage limits compared to other types of coverage.
- Personal Injury Protection (PIP): Similar to MedPay but with broader coverage. Primarily available in “no-fault” states, it can also extend to cover lost wages and other related expenses arising from the accident.
What Your Car Insurance Probably Doesn’t Cover
1. Upgrades and Customizations
Making custom modifications is one of the best ways to make your car your own. But while you’re weighing the cost of those aftermarket rims or that souped-up sound system, it’s important to consider how it’ll impact your insurance premiums.
Standard insurance often has a low limit for custom parts– typically maxing out around $1,000. That means that if any of your pricey additions incur damage above that limit, you’ll need to cover it yourself.
How to get protected:
Depending on your carrier, you’ll often be able to purchase custom parts and equipment (CPE) coverage, an optional endorsement to insure any upgrades or modifications. The maximum limit will vary by insurer but often hovers around $5,000.
2. Mechanical Issues (Mostly)
Facing sudden engine trouble on a road trip is every driver’s worst nightmare. And to add insult to injury, you usually need to pay for it out of your own pocket. A standard policy generally won’t cover mechanical breakdowns unless they’re a direct result of a covered incident, like an accident. Think engine damage from a collision, not a spontaneous failure or deterioration over time.
How to get protected:
As a car owner, replacing worn-out tires, brake pads, or dealing with general wear and tear is considered routine maintenance and is your responsibility.
Prevent costly, uncovered mechanical failures by diligently following your car’s maintenance schedule. Regular upkeep catches small issues early. And while it’s easier said than done, it’s important to set aside an emergency fund specifically for when inevitable out-of-pocket car repairs arise.
3. Help When You’re Stranded
If you’re ever stranded on the side of the road, you may need to call a service provider to give you a tow or a jump start. Unfortunately, this likely isn’t included in your insurance policy. And with the price of a tow averaging $109, a nail in your tire could set you back quite a bit.
How to get protected:
While roadside assistance isn’t usually included in a standard policy, many insurers offer it as an add-on. Otherwise, you can sign up for a motor club like the American Automobile Association (AAA).
Although not everyone feels the need to get a roadside assistance membership, it can be essential for drivers with older cars, or those who tend to take long road trips.
4. Injuries to Your Furry Friends
While coverage types like Personal Injury Protection (PIP) and MedPay will step in to cover injuries to human passengers in an accident, pets are typically excluded from this protection. That means if your furry friend is hurt in a crash, you could be saddled with major out-of-pocket costs for vet bills, even if the rest of your claims are approved.
An exception is when insurers offer pet injury coverage, which covers vet bills if your pet is injured in an accident while riding in your car with you. For example, Progressive automatically includes this protection when you add collision coverage.
How to get protected:
If your insurance doesn’t include any protection for pets, there are other ways to get coverage for your animal companions. Many pet owners, regardless of auto insurance status, buy pet insurance when they bring home their furry friend. This protection extends beyond the car and can help you manage potential health costs for your pet throughout their life.
5. Personal Belongings in Your Car
Comprehensive coverage provides protection against theft involving your vehicle. That means if your car goes missing from your driveway, or your tires are stolen off your vehicle, your insurance carrier will typically help pay for your loss.
However, if you had any valuable belongings inside the vehicle when it was stolen, you may be out of luck.
How to get protected:
Although your car insurance doesn’t cover personal belongings inside your car, you may have other coverage that does. Read through your renters or homeowners insurance policy, as they often extend coverage to your personal property, regardless of location.
6. Driving for Business Activities
If you’re getting paid to drive your personal vehicle, any incidents that occur while you’re on the job likely won’t be covered by your standard insurance policy. That could mean anything from delivering pizzas for a restaurant chain to running errands as a personal assistant.
Your insurer may even question accidents that occur on your drive to work if you didn’t report that you use your vehicle for commuting when the policy was issued. That’s why it’s important to be honest with your carrier, even if it ends up costing you a few extra bucks.
How to get protected:
If you plan to use your car for ridesharing or delivery services, you’ll likely need to get a rideshare insurance endorsement or a commercial auto policy. Talk to your insurance carrier about your situation and find out what kind of coverage they offer.
7. The Full Balance of Your Car Loan
A standard auto policy often provides coverage based on the estimated value of your car and its components. However, when you opt for auto financing, there may be a mismatch between the vehicle’s book value and the remaining balance on your loan.
That means if your car is totaled, the amount that your insurance pays out may be less than what you still owe on your loan or lease– leaving you with remaining debt on top of your lost vehicle.
How to get protected:
If you’re driving a financed vehicle, it’s a good idea to get GAP insurance to make sure you’re able to pay off your loan if the worst happens. This type of coverage pays the difference between what your car is worth and what’s still owed on it. And since it only adds an estimated $20 per year to a full coverage policy on average, it’s typically a high-value choice.
How to Figure Out What Your Car Insurance Will Cover
So if all of these scenarios are excluded from your auto insurance policy, what are you getting for that $2,638 per year?
The best way to interpret what your insurance will cover is to read your policy carefully and call your carrier for clarification. But as a rule of thumb, insurance will only step in for claims that result from covered perils, which vary for each type of coverage.
That means no wear and tear, like battery replacements or worn brake pads. Routine maintenance is your responsibility as a car owner to keep up your vehicle.
It also means that insurance won’t cover intentional damage. In fact, intentionally crashing your vehicle in a pole and filing a claim will not only lead to a denial, but likely a fraud charge. Similarly, if you damage your vehicle due to illegal activity like street racing, your carrier won’t be able to help.
Once you know the exclusions of your auto insurance policy, you’ll get a better idea of whether your policy is what you need. Review your policy, consider your lifestyle and needs, and don’t hesitate to ask your insurer about adding extra coverage where it makes sense for you. Knowing these limitations can prevent costly surprises and ensure you have the protection you truly need.
