In insurance terms, an exclusion is a specific hazard which is not covered by an insurance policy. For example, a life insurance policy may exclude coverage for death resulting from certain activities like extreme sports, war or terrorism. A health insurance policy may exclude coverage for illnesses caused by pre-existing conditions.
In the case of compulsory insurance – such as compulsory health insurance or compulsory liability car insurance – exclusions may be regulated by the state which requires the insurance coverage. In all forms of voluntary insurance, exclusions are determined by insurance providers only.
Understanding a policy’s exclusions before taking it out is important because it taking out insurance which does not actually cover your risks is a bad investment.
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