July 29, 2011

Finding Exemptions In A Car Insurance Policy

For a car insurance policy to be valuable, the owner of the policy needs to know what is and what isn't covered. This means reading through a contract carefully and adjusting coverage as needed. In particular, drivers need to pay attention to car insurance exemptions, as exemptions are built into every policy and can have a significant effect on how insurance coverage works after any type of accident or claim.

The term "exemptions" in insurance refers to situations in which the insurance company won't pay a claim, usually because some factor in the claim was outside of what could reasonably be expected from the car insurance company's point of view. In car insurance, exemptions may not be specifically referred to as exemptions–coverage will be explained in a car insurance policy and examples may be given of situations where a payout wouldn't occur, but some policies won't have a section specifically related to exemptions. The best way to understand what will be paid and what will be dismissed in a car insurance claim is to carefully read through each section of a policy, especially sections that detail the major areas of coverage such as comprehensive, collision and liability insurance.

There are a few situations in which most car insurance companies will deny a claim, and knowing a few of these can also be helpful. For instance, a car insurance company may deny a claim if the driver of a vehicle is operating the vehicle illegally, especially if the driver has a suspended or expired license. This would come into play if a policy holder lends his or her vehicle to a friend or family member who can't legally drive. A claim may also be denied outright if the vehicle is in a serious state of disrepair and if the vehicle's condition directly led to the accident. Fault could be adjusted in this type of situation as well, which would sometimes affect the amount of the payout that a policy holder receives as well as his or her future insurance rates.

While every car insurance policy has exemptions, non-payment of a claim needs to be legal and needs to be properly explained in the policy. Drivers do have recourse if a claim is illegally denied. Claims can be appealed, and if a car insurance company continues to refuse a valid claim, drivers can file a complaint with their state's insurance commissioner. However, it's rare for a valid claim to be denied, and as long as drivers take the time to read their policies and understand how they work, car insurance exemptions are a reasonable part of an agreement that can be managed.