How Much Does Your Insurance Actually Cover? (Part One)

April 19, 2017

Have you ever had an insurance provider refuse to pay a claim because you weren’t covered for as much as you thought you were? Sadly, this happens way too often, leaving many people high and dry when disaster strikes.

In the first half of this two part series, we’ll look at the types of things insurers often exclude from their personal insurance policies, so you’ll be better equipped when it comes to not only choosing an insurance policy, but also in making a claim.

What are Policy Exclusions?

Generally speaking, an exclusion is a policy provision that eliminates coverage for certain risks. These exclusions narrow the amount of coverage that is included in everyday insurance policies, including home and contents insurance, motor insurance, and even personal sickness or accident insurance.

Insurers often exclude cover for the following:

  • Catastrophic events: if something is likely to affect a huge number of policyholders at once, insurers might choose to exclude this. An example is anything related to war.
  • Anything easy to control: If the policyholder can easily prevent damage to their property, an insurer will likely exclude it. This could be any damage caused to property from rain.
  • Not Accidental: This usually applies to personal insurance or motor insurance and includes any intentional bodily harm.
  • Maintenance issues: Anything that occurs naturally is often excluded from insurance policies. Most of the time this relates to normal wear and tear. For instance, if your tyres wear out quickly because they haven’t been rotated, this won’t be included in your motor policy.

This is just a snippet of the type of policy exclusions that can be found in standard insurance policies. Every policy is different, so it’s worth consulting a broker before locking in a contract, or carefully reading the fine print to find out what you’re not covered for.

How to Decode the Fine Print to Spot Exclusions

There are a few places you can find exclusions in your policy. The first, most obvious one is the exclusions section, which outlines any limitations or exclusions. If there is more than one type of coverage there may be two separate lists.

Exclusions can also be found under definitions, conditions, endorsements, and even in the insuring agreement. This is why it’s so important to read all of the documents related to your insurance.

What Happens When You Don’t Have Sufficient Coverage?

Understanding the ins and outs of your coverage is essential, especially when it comes to protecting your family and your assets. If you’re unsure what is and isn’t included in your insurance policy, things could get messy when you try to make a claim.

For example, imagine how devastated you would be if your car was stolen and you thought your car insurance covered theft; but it doesn’t. When you’re making an insurance claim you’re usually already stressed out, so getting caught out by exclusions is the last thing you want.

Motor Insurance

Some common exclusions in motor insurance policies include:

  • Standard mechanical faults. For example, your motor insurance won’t cover the cost of new oxy sensors when the time comes to replace them, or if your engine light comes on and your mechanic needs to investigate why, this will be at your own expense.
  • If an accident occurs when someone’s faculties are impaired by any drug, or when a blood alcohol reading is above the legal limit, the insurer will not be liable for any damages.
  • Loss or damage to a vehicle caused by an unlicensed driver.
  • Theft, where no forcible or violent entry can be determined.

Home Insurance

While home and contents policies cover a host of items, you’ll be hard pressed to find an insurer who will cover the following:

  • Wear and tear, fading, or scratching. This means your insurer isn’t responsible for replacing carpet that’s 20 years old or for re-painting the walls after your dog has jumped all over them.
  • Damage caused from moths, termites, or other insects, as well as vermin, rust, mildew, mould, or pollution. These are all things that can be avoided with regular maintenance and inspections; therefore, insurers are not obliged to cover them.
  • Any act of omission that is dishonest, fraudulent, criminal, wilful, or malicious.
  • The use, removal of, or exposure to any asbestos product, or products containing asbestos.
  • Theft where no forcible or violent entry can be determined. This is one to watch out for, because if you forget to lock your door and someone steals your TV, your insurer might not have to pay.

Personal Accident/Sickness Insurance

If you have personal accident/sickness insurance, you won’t be covered for any pre-existing conditions, unless your insurer agrees to an exception in writing when the cover is taken out.

Keep your eyes peeled for part two of insurance exclusions where we’ll take an in-depth look at business insurance products and their common exclusions, which we’ll be posting in the coming weeks.

In the meantime, you can call the team at GSK Insurance Brokers to discuss your insurance needs.