What is an Exclusion? An Easy Guide to Your Policy

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What is an exclusion: man using a laptop

You might expect your car insurance to protect you in every possible situation. After all, that’s why you pay all that money every month, right?

Well … no. If you read the fine print in your policy, you’ll come across dozens of car insurance exclusions. These are all the things your insurance won’t pay for. And it’s better to know what these exclusions are now rather than wait until you file a claim.

If your current policy has an exclusion making you think of switching to another provider, you deserve to have all the information. This tool allows you to see if there’s a better policy out there for you by presenting quotes from top auto insurance providers such as Nationwide and Liberty Mutual:

Put Some Feelers Out

What is an Exclusion in Car Insurance?

A car insurance exclusion is language in your policy that outlines what’s not covered. Certain drivers and vehicles may be excluded from coverage. Some situations may be excluded from coverage.

Simply put, if you file a claim that arises from one of these exclusions, it’ll be denied.

There are two types of car insurance exclusions: standard exclusions that appear in most policies and special exclusions that are specific to your individual policy.

Common Car Insurance Exclusions

Woman talking on the phone while standing in front of a car accident

One of the most common car insurance exclusions is a named driver exclusion on your insurance contract. This means your policy states that your insurance does not cover one or more household members.

Let’s say your spouse has a terrible driving record and would cost you hundreds per month to insure. Or maybe your 20-year-old son got a DUI, and to avoid paying sky-high insurance rates, you exclude him from your policy and place him on a separate policy. It can be a wise financial decision to take a high-risk driver off your policy — but that driver needs to know the rules! If they drive your car anyway, they’re driving uninsured, which is illegal.

Here are just a few more exclusions you’re likely to find in your car insurance policy:

Intentional Acts

Get so mad at your ex that you ram their car into a tree? Car insurance won’t cover an insured person’s intentional acts that cause bodily injury or property damage. (Note that “intentional” applies to the intent to cause damage or injury, not things like driving faster than the speed limit.)

Using a Vehicle Without Permission

If you drive a car that doesn’t belong to you without a “reasonable belief” that you’re entitled to use it, your car insurance won’t cover you if you get into an accident while driving it. This exclusion typically doesn’t apply to family members using your vehicle. So, if your teenage daughter takes your Jag for a joyride and crashes, that shouldn’t be excluded.

Normal Wear and Tear or Breakdowns

Your policy states that it won’t pay for damage caused by wear and tear, freezing, or mechanical problems.

Non-Permanent Electronic Equipment or Vehicle Modifications

Your auto insurance may not cover electronics in your car or custom graphics, furnishings, or equipment. You’ll need an insurance endorsement to cover those modifications.

Specific Vehicles

Motorcycles, off-road vehicles, snowmobiles, and other vehicles are usually excluded from coverage.

Racing Vehicles

Your policy excludes coverage for any vehicle used in racing or other competitions.

Medical Payment Exclusions

If your auto insurance policy includes medical payments (MedPay) coverage, you’ll see a few more exclusions. MedPay coverage is intended to help pay for your and your passengers’ medical expenses following an accident, whether it was your fault or someone else’s.

However, there are some situations in which this coverage will be denied. Medical payment exclusions may include the following:

  • Using a vehicle for business purposes
  • Using a vehicle for racing, stunts, or other competitions
  • Using a vehicle without the permission of the owner
  • Using a vehicle that’s not a passenger vehicle (such as an ATV or motorcycle)
  • Any injuries that occur while you’re living in your vehicle
  • Any injuries resulting from a nuclear reaction or radiation
  • Situations in which workers’ compensation will pay for your medical care

Liability Exclusions on Car Insurance Policies

Woman talking on the phone while looking at a document

Liability insurance is the part of your policy that pays for other people’s losses, whether injuries or property damage. Liability exclusions in your auto insurance address situations where those losses won’t be covered. 

Some examples include:

Business Use Exclusion

Your liability insurance won’t cover losses that occur while using your vehicle for ridesharing, making deliveries, or other such business uses. If you are a rideshare or delivery driver, you’ll need a special endorsement on your policy to cover you.

Household or Family Exclusion

This liability exclusion says that your insurance won’t pay for damages claimed by a family member who was in the same vehicle as you, the insured driver. This exclusion is meant to deter fraud — like a staged accident after which your spouse sues your insurance company for damages.

Commonly Excluded Vehicles

Standard auto insurance policies are intended to protect standard vehicles: cars, pickup trucks, SUVs, etc. However, unless you have a special endorsement for a non-standard vehicle, your auto insurance probably lists certain vehicle exclusions:

  • Vehicles with fewer than four wheels (like motorcycles or mopeds)
  • Vehicles that aren’t supposed to be driven on public roads (like ATVs or golf carts)
  • Vehicles used for racing
  • Vehicles owned by you or a family member that aren’t explicitly covered in your policy
  • Vehicles used for business purposes

Damage-Related Exclusions

Exclusions also apply to certain damages to your vehicle, including pre-existing injuries.

Damages include but are not limited to the following:

  • Eroding tires
  • Broken windshield
  • Intentional damage
  • Normal wear and tear
  • Mechanical breakdown
  • Electronics not permanently installed

Note that collision and comprehensive insurance do not cover these situations either.

Miscellaneous Exclusions

Outside of named drivers, medical payments, liability, and damage exclusions, other types include police seizures (confiscation of your vehicle), illegal activity, driving outside of the United States, and personal possessions in your car not covered.

With personal possessions, not all hope is lost. A separate homeowners or renters insurance policy may cover the cost of replacing any personal possessions damaged in an accident, regardless of who is at fault.

Should I Exclude a Problematic Driver From My Auto Insurance Policy?

What is an exclusion: stressed man after a car accident

Yes, yes, and yes. Drivers with previous DUI convictions, speeding tickets, and other moving violations could easily cause your auto insurance premiums to go up. Feel free to exclude them entirely for a more affordable policy. Remember, you must let your insurance company know the names of all drivers using your vehicles regularly, likely to be family members or close relatives.

That being said, named driver exclusions allow the excluded driver to be a passenger in the vehicle(s) you drive. However, they may still be entitled to benefits under your insurance policy.

For example, if you live in the no-fault state of Florida, each of your passengers in an accident will receive up to $10,000 in personal injury protection (PIP) coverage, covering the cost of lost wages, medical bills, and funeral arrangements.

Don’t Settle for an Exclusion You Don’t Want

Now that you know what exclusions are on auto insurance policies, now is an excellent time to make sure your policy is working for you.

After all, are you getting the best possible deal on insurance, or are you simply stuck in a comfortable routine with your same provider? If you’re interested in knowing what Direct Auto, Progressive, and hundreds of top auto insurance providers can offer you, use this easy tool: 

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