Exclusion
An insurance exclusion is a clause or provision in an insurance policy that removes coverage for specified losses, causes of loss, property, or circumstances that would otherwise fall within the policy's general scope of cover.
Why insurers use exclusions
Exclusions serve several functions in insurance contract design:
- Manage moral hazard — deliberate damage exclusions prevent policyholders from profiting by causing their own losses.
- Manage catastrophic correlation — war and natural catastrophe exclusions prevent a single event from bankrupting the insurer by affecting all policyholders at once.
- Keep premiums affordable — excluding high-frequency, low-severity losses (like wear and tear) allows the insurer to focus cover on significant, unpredictable events.
- Reflect underwriting appetite — insurers may not have the expertise or reinsurance capacity to cover certain risks, so they exclude them.
The NAIC consumer pages explain how US state insurance regulators must approve policy exclusions before they are used.
Common exclusions by insurance type
- Flood and surface water
- Earthquake and subsidence (often)
- Gradual deterioration / wear and tear
- Infestations
- Unoccupied property (after 30–60 days)
- Business use (unless endorsed)
- Racing or track use
- Driving under the influence
- Unlicensed drivers
- Mechanical or electrical breakdown
- Pre-existing medical conditions (unless declared)
- Extreme sports and adventure activities
- Self-inflicted injuries
- Non-essential / cosmetic treatment
- Epidemics / pandemics (varies by policy)
- War, terrorism, and civil unrest
- Nuclear, chemical, biological events
- Deliberate acts by the insured
- Criminal conduct by the insured
- Sanctions violations
Where to find exclusions in your policy
Exclusions can appear in multiple places within a policy document. Our guide to insurance exclusions explained covers all the locations you should check, including the declarations page, the general exclusions section, per-cover subsections, and the definitions section (which can dramatically affect what an exclusion actually covers).
The FCA rules on insurance product information require UK insurers to provide a summary of key exclusions and conditions in a standardised Insurance Product Information Document (IPID).
Specific exclusions vs. general exclusions
A general exclusion applies across the whole policy — for example, war is typically a general exclusion that removes cover from every section. A specific exclusion (also called a named exclusion) is added to your individual policy at the point of sale based on your application — for example, a specific pre-existing medical condition named in the schedule.
Specific exclusions can sometimes be removed by declaring the risk, paying an additional premium, or providing medical or technical evidence that the excluded risk is lower than initially assessed.
Exclusion FAQ
Frequently asked questions
- No. While some exclusions are near-universal (war, nuclear, deliberate damage), the specific wording, scope, and list of exclusions varies between insurers and products. Always read the full policy wording for your specific policy. The ABI guide to choosing insurance recommends comparing exclusions — not just price — when shopping for cover.
- Yes. Start by requesting the specific clause reference and wording in writing. If you believe the exclusion does not apply to your circumstances, raise a formal complaint with the insurer, then escalate to the Financial Ombudsman (UK) or AFCA (Australia) if unresolved. Our claims dispute guide explains the full escalation process.
- An exclusion removes cover for a specific type of loss entirely. A policy condition is a requirement you must meet to keep cover in force (e.g. maintaining a working burglar alarm). Breaching a condition can allow the insurer to reduce or deny a claim, but a condition is not the same as an exclusion — one sets terms for cover; the other removes it for a specific scenario.
- Often yes. Many standard exclusions exist precisely because the risk is insurable as a specialist product or endorsement. Flood, earthquake, cyber liability, and pre-existing medical conditions can all be covered under separate policies or add-ons. Use our coverage gap calculator to identify which exclusions in your current policies are most worth addressing.