Exclusions in insurance agreements-What they mean

When you purchase an insurance policy, you would assume that most of your liabilities are offered coverage under the plan. Unfortunately, that does not always hold true. Your insurance contract has a section for exclusions, the contents of which are very crucial when assessing the validity of a claim. An exclusion is essentially a policy provision that does away with the coverage for a certain kind of risk. Exclusions bring down the scope of coverage provided by the policy. In most insurance agreements, the extent of coverage is very broad. The insurance company makes use of exclusions to carve away a portion of the coverage for risks that they do not intend to insure. Insurance exclusions vary between plans; hence it is essential to be aware of the exclusions under your insurance. Types of risks not covered under insurance Some of the common types of risks that are not covered under insurance contracts are detailed below:

1. Non-accidental risks - All insurance policies do not offer coverage for events that are caused on purpose. For instance, if a person with a valid car insurance policy causes an accident intentionally to inflict bodily injury on a third party, the event will not be offered coverage.
2. Controllable risks - These risks can be easily controlled by the policyholder, and hence, do not deserve coverage under the plan.
3. Maintenance issues - These risks occur naturally, and hence are not practical to cover. For instance, the wear and tear of an insured vehicle is excluded under a basic motor insurance plan. Risks such as maintenance issues can be easily controlled to a certain extent by the policyholder through proper maintenance of the vehicle.
4. Catastrophic risks - From the perspective of the insurance company, these risks are not insurable as they are likely to have an affect on a large number of insured customers at once. For example, a war is liable to affect a large population at the same time. So, insurance companies refuse to insure such incidents.
5. Illegal activities - Most insurance plans exclude losses that are incurred due to criminal activities or violations of law. So, if a person in possession of a life insurance policy engages in some illegal activity that results in the loss of his/her life, the event will not be covered under insurance.
6. Risks already covered - Some risks may be eliminated from the coverage of a particular type of insurance policy, as these may be covered under another plan.
7. Risks insurable at a cost - Some risks that are not offered coverage under a basic insurance plan may be included under the cover through the facility of add-on covers. Add-on insurance plans enable a policyholder to enhance the protection offered by his/her insurance. For instance, a customer can buy a critical illness rider to supplement the protection offered by his/her health insurance policy. The rider will extend the coverage under the insurance policy to include heart attacks, cancer diagnosis, organ transplants, etc.

It should be noted that insurance exclusions are not set in stone. Most of these provisions are revised on a regular basis. It is advisable to keep abreast of your policy exclusions, so that you do not have to face unpleasant surprises at the time of a claim. Exclusions section in insurance policy In the insurance agreement, the policy exclusions will be clearly listed down in a section that is appropriately titled. Some policies may contain exclusions and limitations. A limitation is comparable to a partial exclusion, as it narrows the scope of a risk that is offered coverage. For instance, insurance companies limit the coverage offered for third-party liabilities under motor insurance. The coverage is usually unlimited for third-party injuries or death, but it is capped at Rs.7.5 lakh for third-party property damage. If a policy offers more than one type of insurance coverage, there may be multiple lists of exclusions in the document, each pertaining to a specific type of coverage. Insurance companies also make use of endorsements to update the coverage offered by a policy. This will be a pre-printed form that is added to the policy document. An endorsement may modify an existing exclusion or add a new one. The insurance jargons in a policy document may confuse you and make it difficult to get a clear understanding of the exclusions. In that case, you should request for clarifications from the insurance company or a certified financial advisor.