What are 'exclusions' in an insurance policy?

Exclusions in an insurance policy refer specifically to particular conditions, events, or circumstances that are not covered by the policy. These are explicitly listed in the policy document to clarify what the insurer will not pay for in case of a claim. Understanding exclusions is crucial for policyholders, as it helps them to know the limitations of their coverage and to avoid any unexpected gaps in protection.

For instance, common exclusions might include certain natural disasters, pre-existing conditions in health insurance, or acts of war. By detailing exclusions, insurers protect themselves from claims that fall outside the agreed terms, while also providing a clearer picture for policyholders regarding what they are and are not insured against. This clarity allows businesses to assess risks accurately and ensure they have additional coverage if necessary.