You want to know that you’re protected from worst case scenarios when it comes to choosing car insurance. However, you may not realise that many car insurance policies do not cover breakdown repairs.
When buying a car insurance policy, you’ll likely need to check not just what’s included in the policy but also what’s excluded, in order to make sure you’re getting the full coverage you need.
Generally speaking, your car insurance may not actually cover your broken-down vehicle. However, this will always depend on the insurer and the type of policy you choose.
Mechanical problems such as engine damage can cause your car to shut down without warning, which can be inconvenient and sometimes even dangerous. Unfortunately, such damage, which can be caused by wear and tear of different components, may not be covered - even by a comprehensive car insurance policy.
Car Insurance provider Budget Direct advises on its website that car insurance may not cover you for mechanical breakdowns due to wear and tear. However, if the problem was caused directly by an insured event, such as fire damage or hail damage, the insurer may cover the cost of repair or replacement.
In general, damage to your car due to long-term usage, including corrosion, mould, wearing down of tyres, belts and other parts exposed to friction, may not be covered - even if you buy a comprehensive car insurance policy.
To ensure you don’t miss out on these aspects of your car insurance, consider checking the insurer’s Product Disclosure Statement (PDS) before finalising your policy.
So, what will your car insurance policy actually cover? Typically, comprehensive car insurance will likely cover the cost of towing the car, or even cover the cost of the transport you need to hire while your car is out of action.
You may be able to get the maker to pay for the damages if the car’s warranty is still active, but chances are you’ll have to pay for the repairs yourself.
Many car insurers in Australia will offer roadside assistance as an optional extra for your insurance policy. One popular option is to become a member of the NRMA and pay an ongoing cost for roadside assistance.
If your car breaks down while you’re driving it on a busy road, you may unfortunately end up in an accident. In this scenario, you may assume your car insurance policy will cover your liability for any injuries and damages caused to other drivers as well as their cars.
This is not always the case. Unfortunately, your insurance provider could deny your claim citing your car not being roadworthy as the reason. This is particularly prevalent for older vehicles, or those that are not regularly serviced. Buying an insurance policy doesn’t prevent your car’s deterioration over time.
This may mean you’ll be faced with the prospect of paying thousands of dollars in repairs and compensation, which may be far more expensive than paying for ongoing maintenance and tune-up of your car. Even with a new car, you may want to investigate the kind of mechanical problems likely to arise and how to avoid these.
Also, your policy will likely cover only the market value of your car in the event you’re involved in an accident and your car is irreparably damaged in a covered incident, but won’t cover the depreciation of the car.
Apart from mechanical failure, your insurance provider can also deny your claim if someone not listed on your insurance policy was driving, even if the damage was caused by a covered incident. Similarly, if you left the car parked in an unsafe location where floods or vandalism could occur, the damages may not be compensated by your insurer.
Consider speaking to your insurer about your car insurance responsibilities, which are usually also listed in your policy document, about the reasons why certain damage claims may not be approved.
This article was reviewed by Peter Terlato before it was published as part of RateCity's Fact Check process.
