Mozo guides

7 common mistakes that will void your car insurance

A Karen screams at her insurance company on the phone after crashing her car.

Aside from the anxiety of reverse parking, driving can be quite enjoyable and therapeutic. However, silly – and avoidable – mistakes happen everyday to even the most responsible drivers. So before you kick it in gear, keep in mind these seven traps that can void your car insurance.

1. Driving under the influence of drugs and alcohol

Kind of an obvious one, but it still needs to be said. Trying to find a provider that will cover you under the influence is like looking for a vegetarian in a steakhouse – highly unlikely. This is because drugs and alcohol can seriously affect your concentration and coordination, so if you get behind a wheel, you're taking on an extraordinary amount of risk.

L or P plater license holders need a blood alcohol concentration (BAC) of 0%, so stick to mocktails if you're a designated young driver. Full licence holders need a BAC of 0.05%, which is still risky business if you’re deciding to drive.

2. Not keeping your car insurance provider in the loop

If you’ve decided to treat your ‘baby’ to an upgrade with some car modifications, let your insance company know beforehand – even if you’re only giving it a spiffy paint job. This is because to your provider, once you make an unauthorised change, your car is no longer the vehicle originally insured.

Deciding to use your car for business purposes is also grounds to call up your provider. If you get into an accident while using your car for a rideshare service like Uber, your claim may be rejected as you were using the car for business purposes.

3. Lack of upkeep

Keep your baby in good condition! Your car needs to be safe to drive, so stay on top of those faulty brake lights, oil checks, and windscreens. Even old engine parts like spark plugs will need a check every now and again, so service your car regularly to stay liquid with your insurance provider.

4. Driving with old tyres

Your tyres cop a beating each time you hit the accelerator, which is why they deteriorate quickly. Luckily, you’ll be able to tell when your tyres need to be changed. ‘Tread wear’ indicators are located at the normal intervals of your tyre and help to identify when you need new ones.

The minimum tread depth should be 1.5mm across the width of the tread – you can measure this with a ruler. Once you reach this, then it’s time to spring for a new set of rubber!

5. Forgetting to pay your premium

This is one of the easiest and silliest things you can to do to void your car insurance is to miss a premium. This interrupts your "continuous" coverage, which means you could be technically uninsured when the incident happens. Not good!

One way to make sure you never miss a payment is by setting up a direct debit through online banking.

6. Leaving your car unlocked

According to a 2021 survey by Budget Direct, over 50% of Australian drivers keep their keys in plain sight, including in the ignition itself. So while you may be ducking into the service station for ‘just a second’ to pay for petrol, it also takes a thief ‘just a second’ to steal your car. Play it safe by always locking your car – even if you’re parking it in the garage.

7. Lending your car to friends

We all want to be a good friend. But letting your mate borrow your car can make your insurance a bit tricky, especially if they get in an accident.

If they are listed as a nominated driver under your policy, then you can rest easy knowing that they’ll be covered (though adding additional drivers can affect your premium). But it’s also worth checking out the claim excess you could be expected to pay if an accident occurs at their hands. If your friend isn't on your policy, you could face an ‘unlisted driver excess’ if they crash it and you need to file a claim, which can cost up to $3,000!

Also, if they’re a young driver under 25, you may be asked to cough up almost double the amount for your excess. Talk about putting a price on friendship!

Bonus car insurance mistakes!

Overloading your car

Giving your car more than it can handle in terms of passengers or load is not only illegal but can void your car insurance. Make sure your load is properly secured before travelling, and if necessary, spread it out over multiple trips and/or multiple vehicles.

If you’re planning to use your car for towing, check with your car manufacturer about the legal limit you are able to tow.

Using your car for any business purposes

Unfortunately, if you use your personal car to undertake any business activities, like selling vegetables out of the boot, driving your Etsy orders to the post office, or even registering it with a your home's business address, your provider could void your policy because you were taking on "extra risk" as a business-owner.

It's a little bit silly, but insurance companies do get quite fussy about personal property used for business purposes. So if you have an ABN and use your vehicle to make money, it could be worth it to look into a form of business car insurance instead.

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    Evlin DuBose
    Evlin DuBose
    RG146
    Senior Money Writer

    Evlin, RG146 Generic Knowledge certified and a UTS Communications graduate, is a leading voice in finance news. As Mozo's go-to writer for RBA and interest rates, her work regularly features in Google's Top Stories and major publications like News.com.au.