Exclusion (Insurance)
IntermediateAn exclusion is a provision in an insurance policy that removes specific events, causes, types of property or circumstances from coverage, so the insurer will not pay claims arising from them.
Insurance policies describe what is covered, but they also list what is not. Exclusions help insurers avoid risks that are uninsurable, too costly, better covered by other policies or within the policyholder's control.
Common exclusions include intentional damage by the policyholder, normal wear and tear, war and nuclear risks, and losses caused by failing to take reasonable care. Many home insurance policies exclude flood or earthquake damage, which must be covered separately. Health and life policies may exclude pre-existing conditions or certain risky activities. Travel insurance often excludes claims linked to alcohol or dangerous sports unless extra cover is bought.
For example, a homeowner whose basement is flooded by rising river water may find their claim refused because their standard policy excludes flood damage.
Exclusions are a frequent source of disputes and disappointment, because many people do not read their policies carefully. Reviewing the exclusions section before buying, and asking about cover for specific risks, helps avoid unpleasant surprises. Some excluded risks can be added back for an extra premium, through an endorsement or rider.
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