Exclusion
Definition
A policy provision that eliminates coverage for specific risks, perils, or circumstances. Exclusions narrow the scope of coverage provided by the insuring agreement.
Example
A property insurance policy excludes damage from floods. When a river overflows and damages the insured property, the claim is denied because flood damage is specifically excluded, even though water damage from other causes might be covered.
In Practice
Exclusions are a critical part of policy language and must be clearly stated. Common exclusions include intentional acts, wear and tear, nuclear hazards, and war. Some exclusions can be removed or modified via endorsement for additional premium. Policyholders should review exclusions carefully to understand coverage limitations.