Auto Insurance: What's Not Covered?

Auto insurance policies differ, but there are some commonalities in what they don't cover. Most auto insurance policies won't cover personal items stolen from your vehicle, such as phones, purses, or computers. Items used but not permanently installed in your car, like GPS or stereo equipment, are also typically not covered. General wear and tear, mechanical breakdowns, and repairs are also usually excluded from auto insurance policies. If you drive your car for business purposes, you will need commercial auto insurance for work vehicles. Driving in Mexico or abroad is often not covered, though some US policies provide coverage in Canada and to a certain distance inside Mexico. Finally, auto insurance policies usually don't cover the remaining balance on a car loan if your car is totalled and the depreciated value is less than the loan balance.

Personal items stolen from your vehicle

Standard auto insurance policies do not cover personal items stolen from your vehicle. This includes items such as cell phones, laptops, purses, wallets, and tools. However, some auto insurance policies may include limited coverage for the contents of your car, but this is rare.

If you want to be covered for the theft of personal items from your car, you should consider purchasing additional personal property coverage from your auto insurance company, or a homeowner's, renter's, or condo insurance policy. These policies typically cover personal property stolen from your home and vehicle.

It is important to note that even if you have comprehensive coverage on your auto insurance policy, which covers the theft of your vehicle and sometimes specific parts, it does not include personal items. Comprehensive coverage is optional and is not included in state-required coverages.

To protect yourself from theft, it is recommended to avoid leaving personal items in your car and to secure your vehicle by parking in safe areas, locking doors, and considering installing a car alarm.

General wear and tear

Auto insurance policies typically do not cover general wear and tear. Wear and tear is defined as the gradual deterioration of a vehicle and its parts due to everyday use over time. This includes the replacement of auto parts such as brake pads, timing belts, and water pumps, which are expected to wear out and need replacement through regular use.

Insurance is designed to protect against unforeseen losses and not inevitable ones. If insurance policies covered wear and tear, insurers would have to dramatically increase their premiums to cover the expenses. Therefore, it is common for auto insurance policies to specifically exclude coverage for wear and tear.

However, there are some protection plans and vehicle care programs offered by dealerships and third-party providers that can help cover the costs of wear and tear. These plans may include coverage for excess wear and tear, such as paint chipping, surface dents, interior damage, and windshield chips, providing peace of mind for leaseholders who want to avoid unexpected fees when returning their vehicles.

Additionally, while car insurance does not cover maintenance for wear and tear, comprehensive and collision coverage can help cover physical damage to your vehicle. This includes accidents, certain natural disasters, vandalism, and theft.

Mechanical breakdowns and repairs

Auto insurance does not cover mechanical breakdowns and repairs. However, you can purchase mechanical breakdown insurance as an endorsement to your auto insurance policy or as a standalone policy. This type of insurance covers the cost of mechanical and electrical repairs for your vehicle. It is important to note that mechanical breakdown insurance does not cover general maintenance, wear and tear, neglect, or tire issues. Additionally, it does not cover towing services or repairs resulting from accidents, collisions, or environmental factors.

Mechanical breakdown insurance is available for various vehicles, including cars, trucks, and SUVs. It can be purchased for new or leased cars that are less than 15 months old and have less than 15,000 miles. The customer must also be the first owner of the vehicle. Once purchased, the policy can be renewed for up to seven years or 100,000 miles, whichever comes first. After paying a deductible, typically between $100 and $500, the insurance will cover the cost of repairs to most original mechanical parts of the car, except for maintenance and wear and tear.

Mechanical breakdown insurance is similar to an extended warranty, but there are some key differences. An extended warranty typically does not have a deductible, while mechanical breakdown insurance does. Extended warranties may also be more expensive, averaging between $1,300 and $4,600 per year. Additionally, extended warranties often require a high upfront cost, while mechanical breakdown insurance allows for pay-as-you-go monthly or annual payments.

When purchasing mechanical breakdown insurance, it is important to compare quotes from multiple companies to find the best coverage and price for your needs. This type of insurance can provide valuable protection against unexpected repair costs, but it is important to consider the age and reliability of your vehicle, as well as the potential cost of repairs, when deciding if this coverage is right for you.

Driving for business purposes

If you're using your vehicle for business purposes, it's important to know that your personal auto insurance policy will not cover you in the event of an accident. This is because insurance companies view business drivers as a greater risk than personal drivers, as they are on the road more often and are, therefore, more likely to have an accident.

If you're a sole proprietor who owns a vehicle used primarily for business, you will need commercial auto insurance. This type of insurance covers business vehicles and typically has higher liability limits than personal auto insurance. It can cover cars, trucks, and vans used to transport goods, equipment, people, or heavy, work-related loads. Commercial auto insurance also usually covers higher claims, different types of vehicles, and more complex legal issues.

If you or your employees use a personal vehicle for work errands, you should consider purchasing hired and non-owned auto insurance (HNOA). This provides liability coverage if you get into an accident while driving your own vehicle for work purposes. It also provides protection when your business rents or leases a vehicle. However, it's important to note that HNOA only covers legal bills and not physical damage resulting from an accident.

To ensure you're properly covered, it's important to understand the differences between personal and commercial auto insurance and to assess your specific needs.

Intentional damage

Auto insurance typically covers damage to your car from a host of problems, including accidents, theft, vandalism, fire, flooding, falling objects, hail, and collisions with animals. However, intentional damage to your vehicle may not be covered by your insurance policy.

An intentional act clause in an auto insurance policy states that no coverage will be provided if harm or injury has been caused intentionally. For example, if a driver intentionally causes a car crash, their insurance coverage may become void, and they may not receive any compensation or recover any damages. This is because the insurance provider is not required to pay out if the driver in question acted with intent.

In the state of Texas, car liability insurance may not cover you if you have been hit intentionally by another driver. This is due to the intentional act clause, which renders the auto insurance of the driver who caused the accident void. If you believe that another driver has intentionally crashed into you, it is recommended that you seek legal advice from a law firm before contacting any insurance companies or third parties.

Vandalism, which is a form of intentional damage, may be covered by comprehensive car insurance. Comprehensive insurance covers damage to your car that is beyond your control, including vandalism and theft. However, filing a vandalism claim could result in an increase in your insurance rates, depending on your insurer and state.

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