What Exclusions are in an Insurance Contract and Why Do Insurers Omit Them?

An exclusion is a provision of an insurance policy that eliminates coverage for certain acts, property, types of damage, or places. Excluded things are not covered by the plan and excluded costs are not counted toward the total maximum amount of out-of-pocket expenses of the plan. An exclusion is an event (hazard, accident, incident, or allegation) that an insurance policy will not cover. A standard insurance policy will normally include some exclusions.

Exclusions are specific types of risk that are not covered by an insurance policy. For instance, most insurance policies don't cover damage caused by wear and tear on a vehicle or home. If your home is considered high-value, you may need to purchase coverage through an insurance company that specializes in protecting high-value properties. Homeowners insurance excludes coverage for losses caused by or to vehicles, because those losses are covered by auto insurance.

It's essential to understand the most common insurance exclusions and why insurers may omit them from a policy. Mold coverage is excluded from home insurance policies, but some companies offer coverages that can be purchased. In some cases, it may be a good idea to purchase an additional insurance policy to cover the gaps caused by an insurance exclusion. Homeowners insurance policies typically cover damage to the home, loss of personal property, civil liability, and other costs, such as temporary housing expenses while the home is being repaired.

One of the most serious exclusions is nuclear risks. Losses caused by any form of nuclear energy, whether from a reactor accident or by a weapon, cannot be insured with any standard insurance policy. Insurance doesn't have to be complicated. Before you buy a policy, make sure you understand what is excluded from your coverage and if there are any additional policies you need to purchase to protect yourself from potential losses.