Car insurance is designed to protect drivers against financial loss in the event of an accident. But many people still ask: What does car insurance not cover? Policies typically cover damages resulting from collisions, weather events, theft, and liability for bodily injuries. However, not every scenario involving a car accident is automatically covered.
Insurance companies routinely include exclusions or specific events or circumstances under which they will deny a claim. Understanding these exclusions can help drivers make informed decisions and avoid unexpected financial exposure.
This article explores common types of car accidents that are not covered by insurance companies, based on prevailing policy terms and industry practices in the United States.
Common Car Insurance Exclusions
While policies vary by provider and jurisdiction, several common exclusions tend to appear across most U.S. auto insurance contracts. These exclusions help clarify what damage car insurance does not cover and why certain claims are denied despite appearing valid at first glance.
Intentional Acts
Intentional acts are a well-established exclusion in auto insurance policies. In Colorado, for example, the APCIA outlines that intentional damage caused by a policyholder is not covered under personal auto insurance. This reflects a broader national standard upheld by most states, which distinguish between accidental and deliberate harm when determining claim eligibility.
Driving Without a Valid License
Most car insurance policies require the insured driver to have a valid driver’s license. If an unlicensed driver causes an accident, the insurer may deny the claim entirely. In Texas, for example, insurance providers are permitted to exclude coverage for drivers operating a vehicle without a valid license.
This reflects a widely adopted standard in auto insurance, where unlicensed drivers are generally excluded from coverage, even if the policyholder was unaware that their license had been suspended or expired.
Commercial Use of a Personal Vehicle
According to the National Association of Insurance Commissioners (NAIC), most personal auto insurance policies explicitly exclude coverage for vehicles used for business purposes.
This means that activities like rideshare driving, food delivery, or transporting goods require either a business-use endorsement or a separate commercial auto policy. Without it, accidents that occur while using the vehicle for profit-generating tasks are generally not covered, even if the policyholder is unaware of the limitation.
Driving Under the Influence (DUI)
Many auto insurance policies include Alcohol Exclusion Laws—legal provisions that allow insurers in some states to deny coverage for injuries or damages that occur while the driver is intoxicated. According to the National Highway Traffic Safety Administration (NHTSA), as of the mid-2000s, over 30 states allowed such exclusions, but more recent reviews indicate that this number has fallen to approximately 18 states that still authorize them.
These laws were originally intended to discourage impaired driving and prevent insurers from covering illegal conduct. While some states have since repealed or limited these exclusions, they remain a significant factor in how DUI-related claims are handled.
Unlisted Drivers
Many auto insurance policies require that all licensed drivers residing in the household be listed on the policy. If a regular driver is left off the policy—intentionally or unintentionally—and causes an accident, the insurer may deny the claim.
For example, the Maryland Insurance Administration warns that comprehensive or collision coverage may be excluded if a licensed household driver is not disclosed to the insurer, even if that person had permission to drive the vehicle. This reflects a broader industry standard that views failure to disclose regular drivers as a material misrepresentation affecting coverage.
Out-of-Country Accidents
Standard U.S. auto insurance policies generally do not cover accidents that occur outside of the United States, its territories, or Canada. As noted by the U.S. Department of State, “If you plan to drive in another country, your U.S. auto insurance might not cover you abroad” (source).
Drivers traveling internationally should consider purchasing supplemental international auto insurance or obtaining coverage from a local provider before operating a vehicle abroad.
Policy Lapses and Expired Coverage
If a driver allows their insurance policy to lapse—due to non-payment, cancellation, or failure to renew—it creates an immediate gap in coverage. As the New York Department of Motor Vehicles explains, “An insurance lapse means that there is no liability insurance coverage for a vehicle registered in New York State for a period of time”.
During such lapses, accidents are not covered, and some states may impose fines, registration suspension, or additional penalties. Although regulations vary, most U.S. states treat insurance lapses similarly, making continuous coverage essential to avoid legal and financial risks.
Acts of War, Terrorism, or Civil Unrest
Auto insurance policies often contain exclusions for damage caused by war, military actions, terrorism, or civil disturbances. These exclusions—commonly referred to as “war exclusion clauses”—are standard across many types of insurance. According to the Congressional Research Service, insurers typically exclude liabilities arising from war or similar large-scale violent events due to the unpredictability and catastrophic scale of such risks.
The Terrorism Risk Insurance Act (TRIA), enacted in 2002, created a federal backstop to stabilize the insurance market for certified acts of terrorism. However, most standard personal auto insurance policies still exclude terrorism-related losses unless the policyholder opts to purchase separate terrorism coverage.
These exclusions reflect a broader consensus in the insurance industry that large-scale violent disruptions are uninsurable under standard consumer policies.
State Laws and Policy Variations
It is important to note that insurance exclusions can vary by state and by provider. Each state’s Department of Insurance regulates minimum coverage requirements and allowable exclusions.
For instance, some states mandate that DUI-related damages be covered under liability provisions, while others permit insurers to deny such claims. Drivers should review their policy documents and consult their state’s insurance department for clarification. A national directory of state insurance regulators can be found here.
What to Do If Your Car Insurance Claim Is Denied
Navigating the insurance claim process for car accidents can be frustrating, especially when a denial is based on an unexpected exclusion. If your claim has been denied based on one of these exclusions, several steps can help you understand and potentially contest the decision:
- Review your policy to confirm whether the exclusion cited applies to your situation.
- Request a formal explanation from your insurer in writing.
- Consult your state’s Department of Insurance to explore appeal or complaint processes.
- Seek legal advice if the denial appears unjustified or if you believe your rights under the policy were violated.
FAQ
Does insurance cover accidents if I was driving under the influence?
It depends on your state and your policy. Some states allow insurers to deny coverage for DUI-related accidents, especially under Alcohol Exclusion Laws. Even where not explicitly excluded, insurers may reduce or refuse payouts based on illegal conduct.
Can an insurance company deny a claim if the accident occurred while using my car for work?
Yes. Most personal auto insurance policies exclude commercial use. If you were using your car for rideshare, delivery, or other business purposes without a proper endorsement, your insurer may deny the claim.
Are hit-and-run accidents always covered by insurance?
Not always. Coverage depends on your state and policy. Uninsured motorist coverage often applies in hit-and-run cases, but it is not mandatory in every state. Check your policy to see if you’re covered.
Knowing the Limits of Your Coverage
While auto insurance offers critical protection in many accident scenarios, it is not all-encompassing. Policy exclusions, particularly for intentional acts, illegal behavior, or undisclosed usage, can leave drivers without recourse when they need it most.
Car insurance companies may interpret exclusions differently, but most follow similar industry standards when determining coverage. Understanding these limits is essential to maintaining financial security on the road.
For those facing complex or contested car insurance claim denials, professional guidance may be warranted. Legal consultation can help clarify your rights and determine whether further action is appropriate.If your insurer is hiding behind exclusions to avoid paying what you’re owed, it may be time to push back. Contact Daly & Black for a free case review with a first-party insurance lawyer who knows how to challenge denial tactics and fight for your rights. We go ALL IN for policyholders—every time.