What does the term 'exclusions' refer to in an insurance policy?

The term 'exclusions' in an insurance policy refers to specific conditions or circumstances that are not covered by the policy. These exclusions clearly outline what risks the insurer will not provide coverage for, helping both parties understand the limits of the insurance contract. This is a crucial aspect of underwriting because it aids in managing risk and ensures that both the insurer and the insured have clear expectations regarding policy limitations.

Understanding exclusions helps policyholders make informed choices about their coverage and can influence the decision to purchase additional insurance or endorsements to cover excluded risks. By specifying what is not covered, exclusions serve to mitigate misunderstandings and disputes during the claims process, ensuring that claims are only paid for covered risks.