Wear And Tear Exclusion

Wear And Tear Exclusion

What is ‘Wear And Tear Exclusion ‘

A provision of an insurance contract that states that the normal, expected deterioration of the insured object will not be covered by the policy. Wear and tear is excluded from insurance policy coverage because it is inevitable. Insurance is designed to protect only against unforeseen losses. If insurance covered predictable losses, insurers would have to raise premiums dramatically to cover these expenses.

Explaining ‘Wear And Tear Exclusion ‘

Auto insurance policies, for example, do not cover the replacement of auto parts that deteriorate with time and use, such as brake pads, timing belts and water pumps. These policies only cover unpredictable events such as collisions. To prepare for predictable losses such as wear and tear, owners can self-insure by setting aside money each month.

Further Reading

  • An economic analysis of fair value: A critique of international financial reporting standards – books.google.com [PDF]
  • Track wear-and-tear cost by traffic class: Functional form, zero output levels and marginal cost pricing recovery on the French rail network – halshs.archives-ouvertes.fr [PDF]
  • DM NANJUNDAPPA: Road User Taxation and Road Finance in Indian Economy (Book Review) – search.proquest.com [PDF]
  • Policy watch: infrastructure investment and economic growth – www.aeaweb.org [PDF]
  • The socio‐economic circumstances of children at risk of disability in Britain – www.tandfonline.com [PDF]
  • Environmental stress, psychological stress and allostatic load – www.tandfonline.com [PDF]