Could My Car Insurance Not Pay Out?

It can be tempting to assume once you've got a car insurance policy in place that whatever you do with your vehicle, you'll be covered and get payouts if something goes wrong. But in reality this isn't always the case.

Although it depends largely on the kind of policy you've got, there are a few situations where you may find that a policy doesn't pay out, potentially leaving you with a bill that could run into hundreds or even thousands of pounds.

The minimum legal requirement in the UK is a Third Party Only car insurance policy to drive a vehicle on public roads. This is needed so any third parties involved in an accident get protection. For example, if you crash side-on into someone's car and the incident was your fault.

Although you would not be able to claim for the damage to your own car, the person you hit would get payouts for car damage or injury caused to them, so in effect you'd be covered for the legal cost. Beyond this, Third Party Only doesn't cover for much else, i.e. if the car is stolen, damaged in an attempted theft, or burnt.

Third Party, Fire and Theft

The next step up from Third Party Only is Third Party, Fire and Theft, which as the name suggests, will cover you against damage caused by theft, attempted theft or a blaze. One thing which may not be covered by this is damage to a window, or one which was smashed completely when someone tries to steal your car but does not take anything.

Some insurers may see this as a glass or window claim instead of theft, and therefore may not pay out on third party fire and theft policies.

The third and highest level of insurance, comprehensive cover, will typically provide protection for this.

Another circumstance where a policy may not pay out is if you're deemed to be doing something with your car not covered by the policy at the time of an incident. For example, a typical car insurance policy will not cover you for commercial use and this may even include going to, from or attending a car boot sale. To provide another example, if you had an accident while moving items in your car in exchange for a small fee, such as when helping someone to move house in exchange for cash, your insurance company may not payout.

Secure your car

When it comes to theft, a car insurance company may also decide not to pay out if it can be shown that you failed to secure the car. To give an example, many insurers may not pay out if your car was stolen after you simply left it unlocked or left the keys in it.

Making modifications to your car which your insurer doesn't know about is ill-advised as well. If you modify or 'mod' a car you can make it a target for thieves, and if you fail to tell your insurance company about the changes, it may not be covered if it is subsequently stolen. Even upgrades like alloy wheels may be a problem. So check with your car insurance company before making an improvement like this to help ensure it will still be protected against theft.

Russell Marlow is a London based freelance writer who writes about financial products including car insurance.