Wear And Tear Exclusion

A wear and tear exclusion is a provision of an insurance contract that states that the normal, expected deterioration of the insured object will not be covered by the insurance 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.

Wear and tear exclusions are fairly common. 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. Auto insurance 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.

Wear and tear exclusions are designed to keep an insurer from being liable when its insured fails to properly maintain, repair and replace deteriorated and/or defective portions of its insured property. The named exclusions and limitations are what actually determine if a property loss is covered. The lists of exclusions are generally extensive, and many insurance companies will cite wear and tear on a claim, even if it isn’t, in an effort to avoid a contractual payment.

When there is a natural destructive event like 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. An example of this is with roof damage claims – insurers often point to the age of the roof or the maintenance record for the roof as reasons why the roof is damaged, instead of that it suffered hailstorm damage.

A false claim by an insurance company that damage resulted from wear and tear can result in an insurance bad faith lawsuit. This tactic is particularly common when events damage older commercial properties, even if they are in good shape. Many times, the insurance company will inspect the property prior to selling the insurance policy and these underwriting reports show the property was in acceptable or even good condition, but the insurance company still attempts to make the wear and tear argument.

A wear and tear exclusion does not have what is commonly referred to as “anti-concurrent cause” lead-in language. Specifically, unlike some exclusions, which apply “regardless of other causes or events that contribute to or aggravate the loss, whether such causes or events act to produce to the loss before, at the same time as, or after the excluded causes or events,” the “wear and tear” exclusion does not contain such lead-in language. Illinois courts have ruled that in the absence of such “anti-concurrent cause” lead-in language, when a covered and uncovered peril combine to cause a loss, the whole loss is covered.