Eight Sneaky Car Insurance Loopholes Designed To Screw You Over

Most Australian drivers have the intelligence and foresight to get comprehensive car insurance. Unfortunately, even the costliest premiums don't necessarily cover you for everything. There are certain accidents and vehicular misfortunes that will cause insurers to leave you in the lurch. Here are eight grey areas that every insured driver needs to know about, from bumbling valets to the lure of ridesharing.

Car insurance comparison site Comparethemarket has collated a list of common traps and loopholes that can void a driver's insurance claim. The company compared and analysed a number of car insurance policies to determine commonly recurring "gotchas". Here they are, in no particular order.

#1 Failure to disclose an Uber-style ridesharing gig

Even if you only use your car for ridesharing part-time, it's imperative to inform your insurer immediately. "If you make a claim and your insurer finds out that your car was being used in a way that was not listed on your policy, they may reduce or even refuse to settle your claim due to the policy conditions," Comparethemarket explains.

#2 "Fronting" a young driver

It's not uncommon for new drivers to insure a car in their parent's name in a bid to save on premiums. However, this tactic usually doesn't work and can lead to further expenses: "Most insurers price their policies using the details of the youngest driver listed. It could [also] exclude you from earning a No Claims Discount, which could have a negative effect on your future premiums."

#3 Failure to disclose past claims or infringements

When signing a new insurance policy, it might be tempting to hide certain details of your driving history to get a better deal. To do so would be unwise: "Any incidents, offences, infringements or loss of licence by you or a listed driver on your policy may affect how much your car insurance is, but failing to notify your insurer may lead them to cancel your policy, reduce the cost of your claimed damage or refuse your claim altogether."

#4 Your valet dinged your car

Some insurance policies do not cover loss or damage caused by valet attendants parking your car. Carefully check the Ts&Cs in your product disclosure statement (PDS) before handing your keys to a stranger. "If in doubt, make sure you or a nominated driver is behind the wheel at any time, or that the valet service is insured to cover you."

#5 Your car was stolen while on sale

This one came as a surprise to us. Apparently, car insurers have the ability to deny your claim if it is stolen in the process of selling it. "If a potential buyer wants to take your car for a test drive, you should accompany them as a passenger," Comparethemarket warns.

#6 Valuables inside your car aren't covered

It's important to check how much your insurer will pay for items inside the car. Depending on your level of insurance, expensive items such as laptops might not be covered. Explains Comparethemarket: "Each individual policy is different, and your PDS will reveal the most your insurer will pay for items inside your car. Although it varies from insurer to insurer, many policies will only pay out a maximum of $500."

#7 Towing when you're not supposed to

Some policies restrict the carrying of trailers and caravans, or the towing of another car: "Many policies state that any condition considered unsafe, un-roadworthy or overloaded may be grounds to deny your claim. Limits, which vary from insurer to insurer, will also apply to trailers or caravans being towed."

#8 Leaving your keys in the ignition

Well, duh. Leaving your car unattended with the keys in the ignition is likely to result in your claim being denied. This is no different to leaving your house's front door unlocked — you are considered culpable in your own misfortune. "As the driver, you are responsible for making sure you take all reasonable precautions to prevent any situations that may lead to theft."

So what can be done? As with most things in life, the easiest way to avoid these pitfalls is by doing your research. Be sure to comprehensively analyse your product disclosure statement, including the reams of small print. If anything isn't clear, ask your insurer for an answer prior to signing.

Has you ever been stonewalled by your car insurer for something you thought they were covered for? Share your stories in the comments section below!

[Via CompareTheMarket]


    Always read the policy, the person on the phones job is to screw you and make the insurer money. We were told we had no coverage when my partners car was hit. I read the policy and found the line/paragraph stating exactly how we were covered. Called up again, they argued, quoted where in the policy we were covered they escalated to supervisor, who also argued, then had to go to their supervisor to approve.

    Would of been a long process of trying to sue the other arsehole in small claims otherwise. It was definitely easier to get a quick insurance claim and leave them chasing the other idiot.

      How did they try to argue when your case was explicitly covered in their policy?

        CTP fire and theft specifically covered the vehicles full value if hit by someone who didn't have insurance. Car was only worth 2.5k, so full comp wasn't worthwhile. They like to leave you with the illusion it ONLY covers fire and theft, which is crap. They still made it difficult by refusing to do any investigation and requiring us to provide all info on the other party, but electoral role combined with a little catfishing to get them to disclose all their details (people are idiots) got me that info pretty quickly.

          Good job on the catfishing and yes, people often are idiots.

            Good job?? Catfishing is illegal under Australian law and is considered fraud. It's a good thing most people are idiots and are unlikely to know this fact.

              Emailing [email protected] to the five potential employers in the area I knew they worked saying "Hi blabla, long time no see! How have things been? We really need to catch up soon! Regards, fakename" worked pretty well when she emailed back saying it really has been too long, etc etc, with her full email signature. I hate arseholes who don't think they have to help after an accident because your car is "shit anyway". Yea, thanks, that shitbox got us around, it doesn't after you wrote it off.

              Even better when three years later she emails me asking for me to urgently approve her employers new logo so they could send something to manufacturing in china that afternoon. I refrained from replying to her repeated and more frantic emails on that one.

              Last edited 15/02/16 3:03 pm

                It's an understandably frustrating situation to be in, for sure, but my comment was really highlighting that even in that kind of situation, people can put themselves in a position where they can be subject to legal trouble if the other party knows the law.
                I highly suspect a strong but politely worded letter might've gotten you the information you needed, but then I don't know the entire story. In any case, I'm glad it worked out for you.

                I'd really be more inclined to fault the insurer in this case because 1) they attempted to reneg on their own written policy, and 2) they tried to make it difficult for you to follow through with the claim. #1 is just as fraudulent, if not more so really, and #2 is just a dick move, but not entirely unheard of. Anything to save a buck, right?

                  Nope, unfortunately straight up douchebag. She admitted all fault at the scene, my partner had never been in an accident before so didn't think to take a photo of her licence at the time, the woman went home, talked to her husband, obviously changed her mind about being cooperative and instead left us screwed over and avoided us. All we had was her name and phone number. She did organise to have her friends workshop look at the car as she was convinced we were ripping her off (old crap car attitude), her friend was the one who suggested where we should look for her work, said she was being pretty unreasonable about it, and that the car was definitely a write off and would of most likely cost more to fix than it was worth. She then completely avoided us except to tell us she was going overseas for three months which is when I put the catfishing plan into action to get the details ASAP. We could of claimed without her details, however we would of had to pay a large excess which we MIGHT of had refunded if they retrieved from her. If we had all her details in the first place we pay no excess.

                  I'd happily do it all the same way again in the same situation. When the law is on the side of the person in the wrong, I have no reason to respect it.

                  Last edited 16/02/16 3:04 pm

    6. Valuables aren't covered - Home and Contents policy will though.

      Depends on the specific wording of the home and contents policy. Some automatically offer cover, others provide this as an option, while many require each item requiring coverage to be listed. Most only cover personal items, but exclude mobile phones.

    Some of these seemed a bit you know common sense. Invalid for using it for uber well yeah you have insurance for personal use then you are using it to conduct business instead of insuring it as a commercial vehicle, then the fact uber isn't exactly legal in some states. Leaving your keys in it. Well you can get fined for that too.

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