Chances are if you carry any sort of insurance policy in Kentucky, you are somewhat familiar with the concept of exclusions. An exclusion is, in layman's terms, simply something that an insurance policy doesn't cover; it is literally excluded from protection by the policy. Of course, life is so much easier when everything is included in one tidy package, but since this is rarely the case, it's important to be aware of your insurance policies' exclusions.
Examples of Exclusions
Homeowner's insurance policies, auto insurance policies, business insurance policies, and health insurance policies all have exclusions. Here are some examples:
- A hurricane blows the roof off your house, and carries your car away, too. Your homeowner's insurance will likely cover the cost of replacing your lost roof; it will not, however, cover the cost of your lost vehicle, even though it disappeared through the same disaster that damaged your home. The homeowner's insurance excludes coverage of your car. However, the comprehensive coverage section of your car insurance policy, if your policy includes physical damage coverage, would respond to a claim for your car.
- You get into a car accident in your own personal vehicle that you regularly use for business. Because your auto insurance policy has a "commercial operations exclusion," it will not cover the cost of damage to your vehicle because the accident happened while you were using it for business (i.e. a commercial operation) rather than for everyday personal purposes.
- A partner in a business steals large amounts of money and is fired. Because the business has a Directors and Officers (D & O) policy that excludes coverage for loss relating to fraudulent or criminal conduct, the financial losses suffered by the business due to the former partner will not be covered.
- Your doctor informs you that you require surgery for a lifelong heart condition. Because your current health insurance policy excludes coverage for all pre-existing conditions, and you had the heart condition before you bought the policy, it will not cover the costs associated with the surgery.
Reasons for Exclusions
There are certain events-primarily natural catastrophes such as earthquakes and floods, or acts of terrorism-that can potentially affect thousands of people. Were insurance companies to cover losses incurred by policyholders during these events, they would likely go bankrupt. In other cases, such as the loss of a car during a hurricane that also damages a home, the home insurance policy provider does not want to cover damage that could conceivably be covered by an auto insurance policy; insurance companies don't want to overlap their coverage.
Dealing with Exclusions
Insurance policy exclusions need not be terrible inconveniences. Understanding how and why they exist is the first step to dealing with them. In addition, make sure to do the following:
- Read the fine print. Know your policy backwards and forwards. Read it thoroughly to make sure you are aware of all of its exclusions.
- If possible, get the items/situations that are excluded by one policy covered by another. For example, if your homeowner's insurance does not cover damage to your vehicle in the event of a hurricane, make sure your auto insurance policy does.
- Know that in certain situations-such as natural disasters-the government may provide a program to help cover your losses - for example, the National Flood Program.
For more information about insurance policy exclusions, contact Linville Insurance Agency today.