What Are the Limitations of a Car Insurance Policy?

There may be confusion among motorists partly due to generously named products like “fully comprehensive” or “full coverage”.

Often, agents tell their clients things like “everything is included”. Sorry to burst your bubble but there is no such thing and certainly there are exceptions and exclusions on a typical auto insurance plan.

First of all, it is totally against the whole concept that you get compensated no matter what. There are already thousands of dodgy and fraudulent claims that companies must have certain rules to measure up to.

Secondly, you need to have the provision included and pay the appropriate premium before you can expect compensation.

Typical Auto Policy Components

Let’s start by explaining the usual components. Policies can be very basic or highly inclusive. However, most people choose three main provisions.

Liabilities are the legally required part and it is a good idea to arrange them with generous limits, as opposed to the state-required basics. It is unlawful for a person to drive a motor vehicle unless they have the policy to pay for injuries and damages they may cause to third parties.

Then, you will probably need Collision to pay for traffic-related accident damages to your own vehicle. The comprehensive part pays for other losses you may suffer due to mainly nature-related causes like fire, flood, and storm.

The key point here is that you cannot have car insurance full coverage cheap if the rules of compensation aren’t well defined.

Who Pays for Mechanical Failures?

The first party responsible for these issues is the owner, who needs to ensure regular maintenance and checks are carried out according to the manual by a competent garage.

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Otherwise, the vehicle will be susceptible to breakdowns. Secondly, the manufacturer has to build parts that will last and offer warranties up to a certain age or mileage.

Insurers cannot be expected to pay for a blown-up engine or an electrical problem. Nevertheless, some of them sell an add-on called Mechanical Breakdown Insurance that pays exactly for these issues as an alternative to extended warranties.

In comparison, it is usually cheaper and premiums can be added to an existing plan. Then, it can be renewed as part of it.

So, you can either extend the warranty, buy MBI or just accept that you will pay for any breakdown out of pocket.

You need to calculate the risks and costs and make a choice. You should keep one thing in mind MBI comes with about a $250 deductible.

The thing is that problems may come in bits and pieces and you keep paying them out of pocket because of the large deductible. It is something to keep in mind.

What Are Vehicle Insurance Exclusions?

Naturally, there are certain cases where your claim can be refused. One of the clear-cut situations is if the damages occur during criminal activity.

Not only you will not be paid but also you may be prosecuted for dangerous driving if a car crash happens while escaping from the police. There isn’t probably much argument against it.

Secondly, deliberately caused accidents aren’t insured. Otherwise, there would be thousands of people crashing their old clunkers into trees so that they get paid for it.

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Adjusters will investigate any suspicious incident and determine if there is malicious intent to defraud carriers. It is a crime to defraud insurance companies and people get charged for it all the time.

Thirdly, owners have the duty to care. Any loss due to gross negligence will not go down well and companies may push back.

For example, you cannot leave your automobile under scaffolding and hope that something will fall onto it. You need to make sure that it is parked in a safe place and properly locked at night.

One of the major issues motorists face these days is that premiums are going up. It is mainly due to inflation but companies do suffer huge losses because of fraudulent and easily avoidable claims.

The only way they can manage to keep the rates low is to stick to certain rules and conditions so that they can reduce losses. Otherwise, the only thing left to do is to pass those costs to customers. So, there is a plan in place here and it is for the good of everyone involved.

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