What Is a Wear and Tear Exclusion?

A wear and tear exclusion is a provision in an insurance policy that states that the normal deterioration of the insured object is not covered by the insurance policy. Insurance is designed only to protect against unforeseen losses. If insurance covered inevitable losses, insurers would have to raise their premiums dramatically to cover the expenses.

Key Takeaways

  • A wear and tear exclusion in an insurance contract states that losses due to normal deterioration of the insured property are not covered.
  • The list of exclusions in a policy may be extensive.
  • The insurer and insured may disagree on whether wear and tear contributed to damage.

Understanding the Wear and Tear Exclusion

Wear and tear exclusions are fairly common. Auto insurance policies, for example, do not cover the cost of replacing auto parts that deteriorate with time and use, such as brake pads, timing belts, and water pumps. Auto insurance policies cover only unpredictable events such as collisions.

Wear and tear exclusions are designed to keep an insurer from being held liable when damage results from a customer’s failure to properly maintain, repair, and replace deteriorated or defective portions of the insured property. To prepare for predictable losses from wear and tear, owners can self-insure by setting aside money each month in an emergency fund.

Exclusions Are Specified

The exclusions and limitations that are specified in the contract are what determine if a property loss is covered. The list of exclusions is generally extensive.

An insurance company may cite “wear and tear” on a claim in an effort to avoid a contractual payment. In the case of a natural disaster such as a flood or tornado, insurers will often try to invoke “wear and tear” and blame the property damage on a preexisting condition.

Other common exclusions include poor maintenance, prior damage, manufacturing defects, or faulty installation. Roof damage claims are often a cause of contention. Insurers may point to the age of the roof or its maintenance record as a cause of the damage instead of a hailstorm.

Damage to older properties is often the cause of disputes between insured and insurer.

When Parties Disagree

A dispute over a claim can result in an insurance bad faith lawsuit. This is particularly common when older commercial properties are damaged. An insurance company will inspect the property prior to selling the policy, and the report may show the property was in acceptable or even good condition, but the insurance company may still attempt to make the “wear and tear” argument.

Wear and Tear Exclusion and Anti-Concurrent Cause Language

A wear and tear exclusion will not have what is commonly referred to as “anti-concurrent cause” lead-in language. This indicates that damage caused or aggravated by multiple factors, including covered and uncovered causes, will not be covered. An Illinois court ruled in 1983 that, in the absence of such “anti-concurrent cause” lead-in language, when a covered and an uncovered peril combine to cause a loss, the whole loss is covered.