By Ross Lee

Have you ever taken the time to read the fine print of your car insurancepolicy? You may be surprised to find out there are some basic conditions that you won’t be covered for.

While there may be a specific limit to what your policy does cover, there will also be excluded events. An event for which cover is specifically not included in the policy is known as an ‘exclusion’.

To clear up some grey areas if ever you get into a bungle, here are some common events where exclusions apply.

1. The driver was not authorised by the vehicle owner
   Sometimes a friend can borrow a motor vehicle without permission.  In those circumstances cover may be denied altogether by an exclusion clause.

1. Driver was under the influence of alcohol but was not tested for blood alcohol content by the Police
   It is common for the exclusion clause in a motor vehicle policy to deny cover where the driver is under the influence of alcohol without any specific reference to having been tested by the Police.

1. The motor vehicle was “only a little bit un-roadworthy”
   Even though a motor vehicle may be in a less than roadworthy condition and the relevant un-roadworthy part may not have any direct connection with the motor vehicle collision occurring, the exclusion clause for un-roadworthiness of a vehicle may apply.
   If your vehicle had an “un-roadworthy” part, even if it may not be the cause of the accident, an exclusion clause for an un-roadworthy vehicle may apply, so don’t neglect the loose bolts and screws.

1. The car was carrying more passengers than its design
   If a driver may be controlling a vehicle where the amount of persons inside it exceeds the number of seatbelts there may be no insurance cover.  Cars are only designed to safely carry a certain number of passengers, so if there is more, the insurer may validly say the vehicle was not capable of being controlled properly.

1. The vehicle is hired to a friend for a fee
   Be careful of lending your car. Even though your friend may not pay you cash, if the vehicle is effectively a hire vehicle in a collision, then an exclusion may apply.

The above examples are only several of many exclusions which may apply to your insurance policy wording in the Product Disclosure Statement – which is a legally binding contract of course.  Today there are many different styles that insurers use to draft a policy which often makes it difficult to compare one set of exclusion clauses against another.

There are also many legal principles that shape how exclusion clauses work.  For example, one long standing rule is that if there are two clauses of damage to a motor vehicle, one of which is excluded and one of which is covered then the excluded one prevails and cover may be denied by the insurer.

As with any contract, it is best to read the policy in the Product Disclosure Statement thoroughly before purchasing your car insurance policy, as you may find yourself caught out of luck if one of the exclusions applies when you need to make a claim.

1. Cover – Without it you have not only paid for nothing, but you’ve denied yourself the opportunity to be insured for the collision you have just experienced. Don’t ever pay good money for bad insurance cover.

2. Price – Yes, Cash is King, but consider also flexibility options such as paying by the month, nominated-driver-only cover and increasing your excess to reduce the premium.

3. Communication – Your insurer needs to be contactable by phone (preferably 24/7), online so you can compare the policy cover and have a physical office reasonably close to you, just in case.

4. One-stop assessment – Assessing centres for car insurance claims are now quite common, but alternatives such as one quote only from preferred / nominated panel shops are often just as speedy.

5. Repairs guarantee – As the market competition heats up, ask if the insurer offers a lifetime guarantees for workmanship on collision damage. Check the fine print though, and don’t forget to ask for new parts if it’s a new car.

6. Agreed or market value choice – There are some interesting hybrids around the insurance market which merge these terms, so be sure that your “agreed value” is not actually market value, up to that agreed amount.

7. Lifetime Rating 1 – the days of Ratings 1 to 6 seem to be ever diminishing, to the ultimate point where all policies will be underwritten as “Rating 1″, but again, as there are several variations on the lifetime rating theme, it’s important to check the details.

8. Hire Car – complimentary use of a hire car has been around a long time for cars stolen but unrecovered, (where the claim has been admitted). The offering of hire cars has been widened quite significantly however, so don’t forget to ask if one is available.

9. Low Risks – insurers are free to adopt certain “Underwriting Guidelines” to basically target any segment they wish, so if you are considered “low risk” – use it to your advantage and shop around!

10. High Risks – some drivers and / or cars will be “hard to place risks” so far as insurance underwriters are concerned, but as with “low risks”, using resources such as www.ratecity.com.au and www.insurancehub.com.au, you will almost certainly find an insurer willing to accept the business on right terms for you.

How do I compare car insurance policies?

RateCity is the best website to shop around on for car insurance and most other financial products. At RateCity, you can use expert comparative data fromCANSTAR CANNEX, Australia’s leading financial research and ratings firm. CANSTAR CANNEX has independently analysed and evaluated products from 23 car insurance providers to award five stars to only the very best. The CANSTAR CANNEX star ratings go much further than just looking at premiums. They also look at driver profiles, state of residency and other factors which may affect premium price so you can be confident you are getting the best product.

As well as comparing car insurance policies at RateCity, you can also get instant quotes from leading Australian car insurance brands.

Article written by Ross Lee, principal of Lee Lawyers, specializing in insurance law and injury claims. Visit www.insurancehub.com.au

Buying insurance is purchasing an insurer’s promise to pay – but will the insurer pay your claim? Not “voiding” your car insurance involves many things of common sense, however here are some special hints and tips on what may not occur to all motorists:

Most policy holders would probably agree that one should tell the insurer if an after-market turbo or super charger is bolted onto a car’s engine. This is part of an insured’s “duty of disclosure”. That duty on the insured most importantly occurs when first taking out the policy and on annual renewal. Be careful how you answer the insurer’s proposal form or initial telephone interview questions. However it is also a continuing duty – for any time – during the policy’s duration.

So, what information should you disclose? Anything the insured does, in fact, know or would reasonably know as relevant to the insurer’s decision to accept the insured’s business, and on what terms. However, one need not disclose anything of common knowledge or information the insurer ought to know anyway, nor anything that actually lowers the risk to be insured.

Each insurer has “underwriting guidelines” on what business it wants to take and on what terms (including premium price, excess levels and so on). If an insurance company can prove it never would have underwritten, for example, a Subaru WRX owned and driven by a 90-year-old person, then it may be in a strong position to deny the claim if full disclosure is not made.

From extreme circumstances, there are less obvious issues that may confront an insured being paid the claim. If something affects the driver’s ability to control a vehicle then the insurance, for all intents and purposes, may be “void”. That may include: driving under any influence of alcohol or drugs (prescription or otherwise); overloading the car or any trailer it may be towing; or failing to reasonably maintain the car to roadworthy condition (such as having bald tyres). Beware also of giving permission for non-listed persons to drive your car. If in doubt, call your insurer to get approval and make full written disclosure up front.

How do I compare car insurance policies?

RateCity is the best website to shop around on for car insurance and most other financial products. At RateCity, you can use expert comparative data fromCANSTAR CANNEX, Australia’s leading financial research and ratings firm. CANSTAR CANNEX has independently analysed and evaluated products from 23 car insurance providers to award five stars to only the very best. The CANSTAR CANNEX star ratings go much further than just looking at premiums. They also look at driver profiles, state of residency and other factors which may affect premium price so you can be confident you are getting the best product.

As well as comparing car insurance policies at RateCity, you can also get instant quotes from leading Australian car insurance brands.

Article written by Ross Lee, principal of Lee Lawyers, specializing in insurance law and injury claims. Visit www.insurancehub.com.au