Business insurance policies usually contain certain exclusions which eliminate or limit coverage for claims emanating from certain risks. Therefore, to ensure you’re adequately covered, you should understand the exclusions in your business insurance policy. Here’s a detailed primer on this topic.
Definition and Examples of Business Insurance Exclusions
Business insurance exclusions are stipulations in your insurance policy that eliminate coverage for given kinds of risks. Exclusions can be broad, excluding coverage for a wide variety of claims. For instance, most commercial auto policies typically won’t protect you if, due to your negligence, you allow an unqualified driver to drive one of your commercial vehicles. Conversely, some exclusions are narrower and only apply in particular circumstances. For instance, the vacancy exclusion that comes with the typical commercial property policy excludes damage to unoccupied buildings resulting from certain risks. However, this exclusion only applies if the building has been unoccupied for over 60 days.
How Business Insurance Exclusions Work?
The insuring agreement in your insurance policy provides the coverage. But, this coverage is narrowed and refined by the exclusions. Your policy’s exclusions eliminate or reduce coverage as well as help define the scale of insurance coverage. Some exclusions are fixed (meaning you can’t remove them), but many can be deleted or modified for an extra premium.
What Can Be Excluded?
- Catastrophic – Most standard business insurance policies exclude risks like earthquakes, floods, and wars because they can affect scores of policyholders at once, leading to catastrophic losses for insurance carriers. This is where specialized endorsements or policies come into play. For instance, you can protect against flood damage using FEMA’s flood insurance.
- Maintenance-Related – Policies that cover physical damage often exclude risks that can be eliminated through proper maintenance or foreseeable perils.
- Illegal or Intentional Activity – Most insurance policies typically exclude claims emanating from illegal or intentional actions of the insured.
Exceptions to Business Insurance Exclusions
Some exclusions are fixed, but many come with exceptions that offer coverage when specified conditions exist. For instance, although general liability insurance typically excludes claims resulting from the use, ownership, or maintenance of watercraft, the exclusion doesn’t apply to watercraft measuring less than 26 feet long that are neither business-owned nor used for commercial purposes.
Where to Find Your Business Insurance Exclusions?
You can locate business insurance exclusions in the “Exclusions” section or similar segments, like “Property Not Covered” or “Losses Not Covered.” Policies that offer multiple types of coverage usually also include the exclusions that come with each type of coverage. You can also find exclusions on the “Policy Definitions” part of your policy. This section is where your insurance defines terms to explain their meaning and outline their scope, usually using exclusionary language. For instance, in the typical commercial auto policy, “auto” refers to land motor vehicles, trailers, or semi-trailers that are designed to be used on public roads. However, “auto” excludes mobile equipment, which also has its own definition in the policy.
How Kneller Insurance Agency Can Help
At Kneller Insurance Agency, our team of experienced and expert insurance agents can help create a customized coverage plan to meet your business needs. If you are looking for business insurance in Columbia County, NY, that adequately protects your business, contact us today at Kneller Insurance Agency.
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