An insurance exclusion explains when a policy will not provide cover, even if the loss relates to an insured risk.
An exclusion is a term that sets a boundary on your insurance cover. It explains which losses, events, people, items, uses or circumstances are not covered.
An exclusion may apply to the whole insurance policy or to one part of it. The exact effect depends on the wording and the facts of the claim.
Most consumer insurance products come with an Insurance Product Information Document. Under the FCA rules for Insurance Product Information Documents, this document should summarise the main exclusions and restrictions. It is not a replacement for the full policy documents.
You should read it alongside the policy wording, schedule and any endorsements.
Insurance covers defined risks. It does not cover every possible loss.
Exclusions explain which risks the insurer has not agreed to cover.
Examples can include:
A policy may also include conditions, such as a requirement to use specified locks or alarms. Conditions are different from exclusions, although failing to meet one may affect a claim.
These are only examples. Exclusions differ between insurers and policies.
For home insurance, the Financial Ombudsman Service explains that damage caused gradually may be excluded even where the final damage appears sudden. However, the insurer must consider the actual cause and apply the wording fairly. Its guidance on gradual damage claims gives more detail.
When you make an insurance claim, the insurer will check whether the event is covered. It will then consider any exclusions, conditions, limits and excesses.
A policyholder will usually need to show that an insured event happened. If the insurer relies on an exclusion, it should be able to explain why the exclusion applies.
A clearly written and relevant exclusion may allow an insurer to refuse all or part of a claim. However, the wording, evidence and cause of the loss will all matter.
The Financial Ombudsman Service’s insurance guidance shows that it may consider whether an insurer interpreted the policy reasonably, investigated the claim properly and treated the customer fairly.
Important restrictions should not be hidden. The FCA says firms should present information in a way that helps customers understand the product and make informed decisions. Its guidance on supporting consumer understanding includes the need to give key information enough prominence.
Before buying or renewing cover, check:
You must take reasonable care when answering an insurer’s questions. The Consumer Insurance (Disclosure and Representations) Act 2012 says consumers must take reasonable care not to make a misrepresentation.
You should also tell the insurer about changes when the policy requires it. This could include a change of address, vehicle use, drivers, home occupancy or building work.
We arrange car insurance, van insurance and home insurance through a range of insurers.
We can help explain key exclusions shown in the policy documents. However, the cover available will depend on the insurer, the product and your full details.
The insurer’s final documents set out the cover. Any claim will remain subject to the policy terms, limits, conditions, excesses and exclusions.
An exclusion explains where insurance cover does not apply. It may relate to a type of damage, use, event, person or circumstance.
Check exclusions before buying or renewing a policy. You should also read them again when your circumstances change or when you receive updated documents.
