By Ross Lee

Have you ever taken the time to read the fine print of your car insurance policy? 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.

By Ross Lee

No Turbos Please – We’re Insurers!
Presuming you do require comprehensive cover, fundamentally each car model has its own risk profile to insurers.  An exotic sports car may be very expensive to insure, while a locally-built sedan with comparable power (but not overtly “sporty”) may command only a modest premium.

Safe Driving History – the NCB
Many motorists know that up to 60% can be saved off the base premium by working one’s way down year by year from Rate 6 to “Rate 1 No Claim Bonus (NCB)”.  Importantly there may be some unpublished claims handling guidelines or even unwritten conventions that may be applied to any one insurance claim. This may impact on the NCB, so on any claim, it is best to check the situation with your own insurer.  Often, for any claim where recovery is not possible, the NCB will be penalised 2 points on renewal.  So among other things, think carefully about making that claim, because in addition to your excess payment (which may be considerable in some circumstances) you may also lose 20% of NCB and perhaps also, the opportunity to improve your NCB 10% that year.

Multiple Policy Discounts
To utilise economies of scale, insurers will often apply cumulative discounts to encourage taking out all your insurances with the same company.  This is commonly referred to as a “bundle” or “package” when it comes to insurance policies. Look for an insurer that covers not only general but also life insurance products and wants all your business.  You may require not only insurance for one car, but perhaps a second one in the family, home building, home contents, special valuables, income protection, life and/or trauma insurance.

Post Code and Car Model
This is mostly relevant to the theft component of premium calculation for insurance actuaries.  If you own a car that is popular with thieves (including older models of Holden Commodore, Ford Falcon and Hyundai Excel) then you may have trouble even obtaining insurance if you live in a suburb that statistically is known for car stealing.  Insurers will often freely publish information for the top 10 of both post code and car model on car theft.  Equally, you may be rewarded in cheaper premiums if you have a good working car alarm fitted (making sure it is always armed when unoccupied).

Usage
A typical business vehicle may well have twice the usage of the equivalent personal use car.  Being on the road say twice as much would suggest twice the risk of a collision. If you are using the car just to get to and from work, then check with the insurer that it is acceptable to have the car insured as private use and keep the extra premium money in your pocket.

By Ross Lee
While the law understands that anyone drink driving is not physically able to control a vehicle properly – an insurance policy may be equally void because the driver was not the holder of a current licence.

Even though it is legal to purchase a chainsaw (a potentially lethal power tool) and operate it unlicensed, in this country the law requires motorists to hold a drivers licence.  Many of us have heard of a motor vehicle insurance policy being voided due to drink driving. However, by operation of the contract of insurance, a perfectly fine driver, driving unlicensed may also disqualify an insurance claim.

Terms and Conditions
There are different conditions for when it is the insured themselves driving, compared with someone else – if another person is driving and the insured did not and could not reasonably have known the driver was unlicensed, there may not be a problem.

However, presuming it is you the insured driving, there are still various circumstances which may arise.  Were you unlicensed due to: being an unaccompanied learner, accumulation of demerit points, prior drink driving / dangerous driving / driving in connection with another criminal offence, or did you just let your licence expire?  Any circumstance of driving unlicensed is an offence and may incur a penalty of imprisonment and/or a fine.

Forgetting to Renew
There is a fairly common view that if you are not licensed because you forgot to renew your drivers licence, then there should still be car insurance cover.  However, that distinction is often not made when referring to exclusion clauses in the insurance policy in a typical Product Disclosure Statement.

Indeed there is no such distinction made in the “prescribed cover” standard under the Insurance Contracts Act.  So even if such an exclusion is not brought to your attention before taking out the policy, there still may be no claim.

At the end of the day, it may fall upon yourself to ask for special discretion with your claims manager for an ex gratia (“out of grace”) payment if you are a particularly good customer.  However, whether any such discretion would be applied, is not for us to say!

Health Check
On the topic of licensing, also watch out for new medical conditions which may affect your ability to control a vehicle – in your state it may now be law for motorists to report such facts to government agencies (Queensland Transport, RTA, VicRoads and so on) immediately, rather than at licence renewal.  So if you are avoiding renewal because you’re dreading an eyesight test, you won’t be doing yourself any favours!