The creation of a reliable insurance policy is very much a science; many risk and cost factors must be measured and predicted before promising to pay for claims made on all the individual policies issued to a large group. Exclusions within an insurance policy are perils faced by an insured that will not be covered by their policy. Exclusions help an insurer limit risks on both a general and specific basis.
All insurance policies come with certain general exclusions. A homeowner’s policy will likely exclude damages due to flood or earth movement; a life insurance policy will generally exclude payment of benefits upon death by suicide in the first two years after policy issue; a car insurance policy will generally exclude mechanical breakdown or parts failures. These general exclusions are included in every policy across the board and are not based on the risk factors presented by the individual applying for insurance, but the overall risks to the insurance company if they were to cover these incidents for every policyholder.
As an insured, you bring a unique set of risk factors to the table when you apply for insurance. Your insurance company may decide that your risk in some areas is much too great for them to insure. This can bring about a specific exclusion unique to your policy. When this occurs, your policy will state the specific incident that your insurance company has decided to exclude from coverage.
Exclusions aren't a default means for handling increased risk in select areas, however. Before excluding coverage your insurer may decide to charge you more than usual through a table rating, which adds an additional percentage to your premium, a flat extra or a temporary extra premium. However if your insurer feels that these measures will not be sufficient in compensating for the additional risk, an exclusion may be the only option available.
Exclusions are a great tool for creating compromise between protecting a carrier’s risk exposure and offering you a policy. It’s even possible that you can get a supplemental policy to cover specific and general exclusions. As an example, while flood damage may not be covered in a home insurance policy, separate flood insurance policies are available to home owners.
To find out more about how Virginia Home Insurance exclusions can help you, and how to plan for them, give us a call at Salzberg Insurance Agency today!