diff --git a/cmd/clusterctl/cmd/version_checker.go b/cmd/clusterctl/cmd/version_checker.go
index 3f974d111a39..d2c6b3cf15b5 100644
--- a/cmd/clusterctl/cmd/version_checker.go
+++ b/cmd/clusterctl/cmd/version_checker.go
@@ -157,7 +157,7 @@ func (v *versionChecker) getLatestRelease(ctx context.Context) (*ReleaseInfo, er
 	// NOTE: local state file is ignored if older than 1d.
 	vs, err := readStateFile(v.versionFilePath)
 	if err != nil {
-		return nil, errors.Wrap(err, "unable to read version state file")
+		return nil, errors.Wrapf(err, "unable to read version state file %s", v.versionFilePath)
 	}
 	if vs != nil {
 		return &vs.LatestRelease, nil
diff --git a/cmd/clusterctl/cmd/version_checker_test.go b/cmd/clusterctl/cmd/version_checker_test.go
index a237c232447e..c52e6bfdb41a 100644
--- a/cmd/clusterctl/cmd/version_checker_test.go
+++ b/cmd/clusterctl/cmd/version_checker_test.go
@@ -401,6 +401,34 @@ func TestVersionChecker_ReadFromStateFileWithin24Hrs(t *testing.T) {
 	g.Expect(release.URL).To(Equal("https://github.com/foo/bar/releases/v0.3.10"))
 }
 
+func TestVersionChecker_ReadFromCorruptedStateFile(t *testing.T) {
+	g := NewWithT(t)
+
+	ctx := context.Background()
+
+	tmpVersionFile, cleanDir := generateTempVersionFilePath(g)
+	defer cleanDir()
+
+	// Create a corrupted YAML state file
+	corruptedVersionState := []byte(`LastCheck: "2025-02-11T09:56:59.8701-07:00"
+LatestRelease:
+  URL: sigs.k8s.io/cluster-api
+  Version: 1.9.4
+4
+`)
+	g.Expect(os.MkdirAll(filepath.Dir(tmpVersionFile), 0750)).To(Succeed())
+	g.Expect(os.WriteFile(tmpVersionFile, corruptedVersionState, 0600)).To(Succeed())
+
+	versionChecker, err := newVersionChecker(ctx, test.NewFakeVariableClient())
+	g.Expect(err).ToNot(HaveOccurred())
+	versionChecker.versionFilePath = tmpVersionFile
+
+	// Expect the checker to raise an error containing the state file path
+	_, err = versionChecker.Check(ctx)
+	g.Expect(err).To(HaveOccurred())
+	g.Expect(err.Error()).To(ContainSubstring(versionChecker.versionFilePath))
+}
+
 func generateTempVersionFilePath(g *WithT) (string, func()) {
 	dir, err := os.MkdirTemp("", "clusterctl")
 	g.Expect(err).ToNot(HaveOccurred())