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What Do you Mean, Exclusions?

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Some Things Still Aren't Covered

Having an auto insurance policy is a good thing. It shows that you're a responsible driver and it likely fulfills your state's requirements concerning the legality of your sharing the road with other drivers.

However, even if you have auto insurance, there are a number of instances where your automobile policy won't provide coverage. Such instances are called EXCLUSIONS. Why should exclusions exist in an insurance contract? Actually there are quite a few different reasons. Some fundamental reasons are that exclusions:

help maintain the expense of providing insurance;

prevent coverage under one policy when it should be covered elsewhere; and

prohibit coverage for losses that are against public policy.

Let's look at these reasons a bit more closely and provide some examples.

Help maintain the expense of providing insurance

If an individual's auto policy could be counted on to respond to every imaginable loss, it would also have an unimaginable premium. Auto insurance premiums are affordable only if insurance companies can exert some control over the losses their policies can be expected to cover. Therefore, automobile policies generally contain exclusions similar to the following example.

This automobile policy does not provide coverage for accidents which involve:

injuries caused directly or indirectly by a nuclear weapon, reaction radiation or contamination; or by war, civil war, insurrection, rebellion or revolution.

injuries involving any vehicle inside a facility designed for racing while preparing for ,or competing in, a race.

The first instance involves losses that are beyond any insurance company's ability to control and such losses would likely be far beyond the ability of most insurance company's to pay.

The second instance involves losses that are strictly under an individual's control. Insurance companies certainly want to avoid situations where their customers choose to put themselves and their cars in an excessively dangerous position.

Prevent coverage under one policy when it should be covered elsewhere

Most automobile policies won't provide coverage for a loss or injury which:

happens while being in a vehicle that has fewer than four wheels

occurs while the vehicle is being used to transport persons or property for profit

happens while the vehicle is in place and being used as a premise or residence

occurs while on the job, and workers compensation coverage is either available or required for the bodily injury

happens while an insured is occupying, or is hit by, a vehicle that is owned or is regularly available to an insured, but the vehicle is not listed on the automobile policy.

occurs while in a vehicle that's being used in an insured's "business." Coverage still applies if the insured is in a private-passenger auto, an owned pickup or van, or a trailer being used with such vehicles.

These limitations are fair. Their purpose is to make sure that coverage which you purchase for your own car, van or truck listed on your policy does not also provide coverage in situations which are better covered by:

another person's policy
worker's compensation or a business policy
specialty coverage (such as racing events coverage)

other types of policies such as mobile home, recreational vehicle, motorcycle or business coverage.

Prohibit coverage for losses that are against public policy

Some examples of this reason are when coverage is denied for losses:

occurring when the injured person is occupying a vehicle knowing that she or he does not have the vehicle owner's permission

that were fraudulently staged by the vehicle's owner in order to collect insurance for "phantom" injuries.

Insurance would quickly be impossible to buy if policies were expected to pay for injuries to car thieves or people who fake accidents and injuries.

So remember, without reasonable exclusions, you or I would not be able to enjoy the protection and security that is offered by automobile insurance. If you have questions about exactly what is excluded by your policy, talk to your insurance agent..

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