Risks that fall outside, or do not meet, the laid down guidelines as defined by the insurance company are called uninsurable risks or perils. Any loss suffered by an insured party must be the result of an unforeseen and completely sudden happening to qualify as an insurable risk. Examples in the case of car insurance are incidents such as an accident, theft by unknown burglars or robbery, hijacking or fire damage. None of these have been planned by the insured party and these are called fortuitous losses.

If your car is destroyed in a fire resulting from a bush fire, your insurance company will refund this as a valid claim. On the other hand, if you deliberately set fire to your car, in order to claim from the insurance company, your claim will be refused if the insurer can prove that the fire was deliberately started. This will be called arson and is an uninsurable risk.

Other examples of uninsurable losses are causing an accident while driving without a valid driver’s license and leaving your car unlocked, with the keys in the ignition. Another rule in short-term insurance is that you must have an insurable interest in the item you want to insure, you therefore cannot insure your neighbour’s car.