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The Top 5 Reasons You Might Not be Covered in an Automobile Collision

Car insurance can be a tricky thing. Yes, your car insurance policy is designed to protect you and your vehicle when you need it. However, there are a few unfortunate situations when your insurer could deny your claim for vehicle damage after an accident. The following are some of these situations. Some may seem obvious, while others may surprise you.

  1. You’ve breached a condition of your policy by participating in illegal activities: Illegal activities could be described as street racing, illicit trade or transportation, and drunk driving to name a few. Not only could these activities land you a substantial fine or jail time, but your insurance company may deny your claim and cancel your policy.
  2. Repairs to your vehicle cost less than your deductible: Let’s say that the cost to repair the damages to your vehicle equal $300 and your deductible is $1000, you will be responsible for paying the bill. Make sure you understand what a deductible is and get your broker to explain your deductible in your policy.
  3. Your policy has expired or been cancelled: If your car insurance policy was cancelled and you continue to use your vehicle without purchasing new coverage, you won’t be protected in a collision.
  4. Reporting a fraudulent claim: This type of fraud occurs when someone devises a way to claim for an insured loss event. Premeditated fraud often involves extreme action, such as:
    •  Causing a vehicle collision with unsuspecting drivers or staging a collision​ with other conspirators. One or more people then claim and collect benefits from insurance companies for non-existent injuries. This kind of fraud may also have related financial and human costs, as unsuspecting victims often suffer very real injuries.
    • Making an insurance claim for an event – collision, vehicle theft, break-in, etc. – that never happened
    • Encouraging anyone to participate in fraudulent activity
    • Intentionally burning a vehicle
    • Falsely reporting a vehicle or its contents as damaged or stolen
    • Devising a way to avoid paying insurance premiums, including:
        • Not reporting licensed drivers in the household, or misrepresenting primary vehicle drivers – this may occur when an inexperienced driver is actually the principal driver but a parent or grandparent is reported as the principal driver on the policy
        • ​​Reporting residency at one address when living at another
        • Knowingly purchasing phony proof of insurance cards or pink slips
        • Failing to report significant changes to the condition, value or use of insured vehicles – for instance, making deliveries or transporting passengers for a fee or as part of a paid service such as a daycare when a vehicle is insured only for personal use
  5. Your claim is not covered by your policy: There are many situations where this might occur:
    • You decided not to purchase collision coverage (the coverage you need if you’d like to be reimbursed for repairs following a collision).
    • You have a personal car insurance policy but you’re using your vehicle for commercial purposes (ex. using your car to make deliveries or as a taxi/Uber).
    • The collision was caused by something specifically listed as an “exclusion” in your car insurance policy.
    • You allowed an excluded driver (someone you have intentionally removed from your car insurance policy) to drive your vehicle.

There you have it. You now know certain situations where your insurer may deny your claim. The good news is most of these situations are avoidable. Make sure your broker is informed about any changes regarding your vehicle so that they can make sure you have the necessary coverage you need. Drive safe.


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