What Does Excluded Mean in Insurance Terms?

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 a provision of an insurance policy or bond that relates to hazards, hazards, circumstances, or assets not covered by the policy. Insurance exclusions are provisions of the policy that exempt coverage from certain types of risks or events.

Exclusions specifically specify certain types of risk that are not covered by an insurance policy. For example, homeowner policies often exclude coverage for flood damage, but this protection is available through a separate flood policy. In some states, auto insurance policies may exclude a member of the policyholder's household whose driving history, age, or other condition involves greater risk and a higher premium. Homeowners insurance excludes coverage for losses caused by or to vehicles, because those losses are covered by auto insurance. If you're not sure what's excluded from your policy, contact your insurer to check the details.

Exclusions, in the context of insurance, refer to certain provisions of an insurance policy that exclude the coverage of expenses that arise from the occurrence of a specific event. For example, car insurance generally excludes two- or three-wheeled vehicles, aircraft, and boats. In addition to the sections that specify the above-mentioned hazards and the coverage offered, an insurance policy may also include exclusions in the clauses that cover the definitions, conditions and endorsements. Most health insurance companies publish a list of drugs or a formulary that can have up to five levels and indicate which drugs are fully covered, which have a higher copay, and which are excluded. Many risks are excluded from one type of policy because that coverage is included in another type of policy.

Many health insurance policies exclude non-traditional providers, such as chiropractors, herbalists, or spiritual healers, as well as any provider that is not authorized by the state to practice medicine. Mold coverage is excluded from home insurance policies, but some companies offer coverages that can be purchased. At one point in time, many health insurance policies excluded conditions that were known before purchasing a new policy. For example, general liability policies generally exclude product liability coverage for defective products for bodily injury or property damage caused by the products you manufacture or sell. Once you understand what hazards or situations are excluded from coverage, ask yourself what level of risk you are willing to tolerate with respect to those specific risks.

Some regions require separate flood insurance, and others may exclude earthquakes or sinkholes, requiring additional coverage. There are some risks that insurers exclude because they can be easily mitigated or significantly reduced if the insured takes appropriate precautions or measures.

Gertraude Jackel
Gertraude Jackel

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