Wednesday, October 13, 2010

4 Common Auto Insurance Policy Exclusions

6:15 PM |

I’m not surprised, that most people don’t read their insurance policy. The standard insurance policy contract is long, boring, confusing, and actually, misleading. For example, in many cases a coverage is excluded in one section, only to be added back later on in the policy..It’s frustrating, that you need a lawyer or an expert by your side, to understand what exactly your covered for.

Being in the personal insurance industry since graduating college, I have been able to recognize the most common misconceptions about what is and what isn’t covered in an insurance contract. The purpose of this post, is to review four common insurance policy exclusions, so you don’t have to receive that phone call from your insurance carrier, telling you that the damage to your auto isn’t covered.

Exclusion # 1 – Delivery for Commercial Purposes

If you pick up a job delivering pizzas a few nights a week, don’t expect coverage from your personal auto insurance, if you happen to get in an accident while delivering. Commercial deliveries are excluded from the standard personal auto insurance policy.

Always check with the company you are working for, to see if they have a commercial auto policy, that will cover you, while you make deliveries.
Exclusion # 2 – Company Vehicles

The insuring agreement of personal auto policy excludes, “coverage for the use of a vehicle furnished or available for your regular use.”

A common scenario where this exclusion comes into play, is as follows:

Your employer supplies you a company vehicle. Your spouse, also has a car of their own, which is insured under a personal auto policy, which you are named under. If your spouse were driving your company car, she has no coverage under the commercial auto policy.
Exclusion # 3- Vehicles not Considered Autos

Auto insurance doesn’t cover all things with a motor. Typical exclusions include boats, four wheelers, motorcycles, go carts, and golf carts.

Before adding this on to your auto policy, first check with homeowners insurance, to see if it’s covered through your policy. In most cases, you have to add a special endorsement, either to your home or auto insurance, or buy a separate policy.
Exclusion # 4 – Personal Contents

The gadgets we carry in our cars today, are not cheap. Alone, the combined cost of even a cheap cell phone and portable GPS unit can run over $600. If you add in your CD collection and iPod, you’re easily approaching $1,000 of personal contents in the car. Unfortunately, if someone were to break into you car and steal these items, none of that is covered under your auto insurance policy.

However, personal contents are covered under your home/renters insurance policy.
Endorsements to Insurance Contracts

All of the above are excluded from the standard insurance contract. That doesn’t mean that individual carriers, can’t add them back in. Adding coverage to a policy, is called an endorsement.

The next time you’re reviewing your insurance agreement, check to see what your policy is endorsed for. There are a lot of special perks, the better insurance companies will give, that often go unnoticed.

It seems every time, there is a major flood in the area, the local news, always finds that one person who didn’t understand that flood is excluded from the standard home owners policy. Part of me, is sad when I see this happen. The other part is frustrated.

It’s a good practice to read your insurance contract. Set aside just a few twenty minute chunks of time, to get through your auto, home, life, and health insurance contracts. I promise, that you will learn a lot.

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