THE AUTO POLICY EXCLUSIONS

 

THE AUTO POLICY EXCLUSIONS
Robert Carper

The auto policy contains exclusions that apply depending on many factors. This post offers a glimpse of auto policy exclusions but does not cover the entire topic. It is a brief overview. Depending on your needs and situation consult your agent, claim rep or staff attorney as the situation dictates. All liability policies have exclusions. These exclusions are typically unique to the particular policy and vary depending on the type of coverage that is being underwritten.  Sometimes an endorsement can “buy back” coverage depending on the carrier’s contract, the type of exposure and other factors.
Exclusions listed in a personal auto insurance policy vary depending upon what state laws permit and then the guidelines of your car insurance company. When something is noted as excluded on your policy, it means that your policy won’t cover it.


Exclusions can be associated with a person, property, location, peril or specific situation.
The most common exclusion regarding a person is a named driver exclusion. With this, you and your insurer agree to exclude a specific person from your policy’s coverages. This driver isn’t rated on your policy, and in return your insurer won’t cover the individual if found driving your car.

Here’s a look at some of the most common exclusions found in the different parts of a personal auto insurance policy.
Bodily and property damage liability exclusions
Most policies plainly state they don’t provide liability coverage:
• If an insured has intentionally caused injury or property damage.
• For property damage to property owned (or being transported) by the insured. (So if you hit your own car you can’t make a liability claim)
• For property damage to property that is rented, used by or in the care of the insured.
• For bodily injury to the insured or any member of an insured’s family residing in the insured’s household. (Some states only allow

the policy to reduce the bodily injury limits for family members to the state's minimum)
• For liability arising out of the ownership or operation of a vehicle being used for “livery conveyance.” This means using your vehicle in transportation of goods or people for payment – so don’t use your car as taxi or delivery service. So, don’t use your car for delivering pizzas, or you may void your coverage.
In general, using your vehicle for business purposes can be a no-no according to your liability policy.
Catastrophic events or exposures are usually marked as excluded as well. This can include items such as bodily injury or property damage resulting from:
• Nuclear exposure or explosion – including the resulting fire, radiation, or contamination.
• Bio-chemical attack or exposure to bio-chemical agents as a result of an act of terrorism.
• War (declared or undeclared)
Vehicles that are excluded from coverage (or deemed unacceptable to cover for either liability or physical damage coverages) vary but the list may include:
• One with less than four wheels
• Designed for use principally off public roads or not registered for use on public roads
• Any vehicle owned by you or a family member but isn’t listed as insured on your policy.
• Any vehicle furnished for your regular use but isn’t listed as insured on your policy.
• Any vehicle used for the purpose of competing in a race or practicing or preparing for any prearranged or organized racing or speed contest.

Some insurers have amended policies to include an exclusion for any vehicle that is operated, maintained, or used as part of a personal vehicle sharing program. So, loaning your vehicle out for to a car-sharing service could mean you have no personal coverages.
Physical damage coverage exclusions

Collision and comprehensive coverage are the physical damage coverages offered by auto insurers. While liability insurance covers those that you damage, collision and comprehensive cover your own vehicle if it’s damage.
Exclusions under this portion of the policy can be similar in many ways to the restrictions listed in your liability portion of your policy. Typically, collision and comprehensive coverage exclusions include loss or damage due to:
• Wear and tear
• Freezing
• Mechanical or electrical breakdown or failure
• Road damage to tires
• Catastrophic events - radioactive contamination, nuclear weapon discharge, war, etc.
• Destruction or confiscation by government or civil authorities
• Using your vehicle for livery or delivery purposes
• Vehicle being used for racing purposes
• Intentional damage
• Vehicle used in personal car sharing programs (some insurers)

Personal items that are damaged in your vehicle or stolen from it aren’t covered, and most policies specifically mention the exclusion of coverage for losses to:
• Any electronic equipment that is not permanently installed.
• Custom equipment (or is covered to a specific minimal amount -- such as $2,000) unless you’ve added a custom parts and equipment endorsement to your policy.
If a vehicle is excluded from liability coverage, then typically it’s also unable to obtain physical damage coverage. However, there are some vehicle that insurers allow to obtain liability but not collision and comprehensive -- such as vehicles with a salvage or rebuilt title.

Medical payments and uninsured motorist bodily injury
Medical coverages you can purchase for yourself as part of an auto insurance policy have exclusions as well. Typically, they include injuries sustained in circumstances mentioned above, such as catastrophic events, racing or livery service, as well as situations such as:
• Injured on a motorized vehicle having fewer than four wheels
• Injured while using the vehicle as a residence
• Injuries that workers compensation benefits should cover because occurred during the course of work

Overlapping insurance policies create an exclusionary situation.

To be aware of your exclusions and restrictions, read your policy and then contact your car insurance company if you have questions.

Documents matter. More to the point, Documentation really matter




This is part 1 of this post. Part 2 will post May of 2015. Documents matter. More to the point, Documentation really matters. A properly documented claim file should "speak for itself." Anyone reading the file should be able to understand the basic facts of the claim, the outstanding issues, and what is being done to bring the claim to resolution. A good rule of thumb is the saying "If it's not in the file, it did not happen." A well documented file is the key to making the proper decision on that particular file. These suggestions are just that, suggestions.

Your company guides is the best source to lead you collecting proper documentation. The investigative needs will also serve to help in these endeavors. Every claim file is different.

 

It is important that information related to claim decision  making be documented in the file. Decision support is best documented in clear, concise, relevant, professional (civil) statements that summarize in accurate fashion what was said, who said it and when as well on what information a decision is based and the explanation of the direction the claim is going - who, where, when, how and why.

In theory, the documentation should be to the level that anyone can look at it and clearly know what was discussed, what was resolved and whether or not there are open issues. If it does not meet this level, it is probably inadequate.

Why is this level of documentation so important? When looking at some claim files, is it evident there was a misunderstanding between what the customer told you and what you heard? What if a claim develops and the misunderstanding now surfaces? The goal must be to try to resolve any misunderstandings before the claim occurs. What is the best way to do this? Further, the legal ramifications of poor claim file documentation is staggering.

Things to document include, but are not limited to: 

·      Phone calls  (made and received)

·      Letters, memos & reports ( contact, status, denial, specific request etc)

·      Photos

·      Estimates - receipts - proof of ownership documentation

·      Diagrams or property or accident scene

·      Any legal documents - releases. suit papers, subpoenas, letters, opinions issued etc.

·      Conversations with anyone related to and of relevance to the claim

·      Explanations provided to insured, claimants, vendors, agents staff etc.

·      Coverage confirmation

·      Negligence

·      Exposure

·      Damages

·      Supervisor/Manager input

·      1^st & 3^rd party discussions and claim decisions

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Claims Best Practices (Part 1)
by Robert Carper

I spent years in property and casualty claims. Claims professionals are often referred to claims Best Practices as a guide on how to handle claims. What is "Best Practices"? Best Practices often serve a roadmap to achieving Quality Claims Outcomes.

The Best Practices may vary from carrier to carrier but the core intent is much similar. This is a two part series, after which, I will elaborate in detail on each Best Practice item in up-coming post. My background and experience affords me the opportunity to offer both property and casualty Best Practices assessment. Claims (property & Casualty) Best Practices typically consist of the following areas:

 

• Prompt, Meaningful Contact
• Special Handling Compliance
• Communication with all parties as needed
• File documentation
• Photos and estimates if needed in the file
• Policy Confirmed for property/car etc. on date of loss
• Coverage Analysis review
• Regulatory Requirements compliance
• Damage Evaluation assessment
• Claim file reporting requirements
• Reserves properly addressed for claim file exposures
• Assigned Authority (personal) with assigned position profile
• All necessary parties contacted
• Efficient claim handling utilized
• Negligence assessment determined and explained

Potholes Cost Insurers, Consumers $27B

March 12, 2015

As you may have found out the hard way, hitting a pothole could damage your tires, wheels, shocks, or struts. Repairing that damage can be expensive. According to AAA, repair costs can range from $50 for a simple wheel alignment to $500 or more for replacing a top-of-the-line alloy wheel. Over the life of a car, insurance agents say that a driver can pay up to $2,000 or more in repair costs due to damage from poor road conditions

Poor road conditions have cost consumers and the insurance industry at least $27 billion over a five year period, according to a 2014 survey commissioned by Trusted Choice and the Independent Insurance Agents & Brokers of America.

The survey also reveals that from 2009 to 2014 half of car owners experienced damage to their vehicles as a result of potholes.

“The snow, ice and freezing rain during the rough winter months left their mark on the country’s roads,” says Robert Rusbuldt, Trusted Choice president and Big “I” president & CEO. “Severe potholes have led to accidents which may impact insurance rates, as premiums are determined by past claims, accidents and driving violations. Potholes and poor road conditions aren’t just an inconvenience, they are an expensive and dangerous result of harsh winters.”

The pothole survey also found that 31 percent of car owners who reported pothole damage to their vehicles filed a claim with their insurance company. A surprising 65 percent of respondents who needed repairs said they (or a third party) paid out of pocket for the vehicle to be fixed. Only about 3 percent said local authorities stepped in to foot the bill. For about 40 percent of respondents, that bill was more than $500.

The Auto Black Box

Could you cars black box be used against you in court or by your insurance company?Did you know that your car, if it is a 2005 or newer car has a 64 percent chance that it has an onboard black box just like an airplane that is recording everything you do?

                                                             

   Recordedstatement.net

Recordedstatement.net is a growing digital destination
for insurance claims professionals. We serve as a guide
to enhance the investigative quality of the recorded statement
process. We seek to provide the content, process improvement
and skill enhancement in this area.

HOW TO ELICIT RESPONSES
Wait at least 20-30 seconds for responses. Silence is acceptable
during a Recorded interview to allow interviewee time to think about
the question and their response. The more time you give interviewee
to think the higher level answers you will receive. There will be increased
interviewee participation.

Ask clearly worded questions and speak clearly when you ask them.
Only ask one question at a time.
Rephrase a question only after the wait time.
Don't answer your own questions.
Remember - pauses and silence is not a bad thing if properly placed
Ask open-ended, not just close-ended questions.
Ask divergent as well as convergent questions
Repeat the question, paraphrasing it
Ask probing questions
Ask for detailed descriptive information
Ask the question and then shut up
Don't ask leading questions
Know when to ask yes or no questions
Feedback then feed forward for clarity
Be prepared to answer why you asked the question
Know what is considered a inappropriate question
Use questions to establish rapport
Don't interrupt the interviewee

Policy Fraud Checklist

Loss within first year of cover Loss shortly before renewal/expiry of cover Loss shortly after increase in cover Notification of claim after policy lapse/cancellation Existence of multiple policies covering same loss Premium payment abnormalities Pre-loss enquiry re cover/claims circumstances Non-disclosure/misrepresentation Frequent changes of insurer Gaps in previous insurance history Evidence of significant over insurance/under insurance Policy arranged via agent far away from insured's home Poor claims history Claimant appears to be different from policyholder Questionable use of property/occupation at time of loss Evidence of pre-loss business/personal and/or financial problems