3 Things Excluded From Your Standard Insurance Policy (2024)

Property insurance policies for homes and businesses are not all-encompassing. In fact, most standard policies contain exclusions that if not understood by the policyholder before a disaster strikes, can significantly affect their financial settlement post-disaster.

Understanding the depth of your policy can help you decide whether or not to purchase additional coverages to balance out your financial risk for weather-related events and estimate the impact it may have on your property and wallet.


  • Flooding is not covered under most property insurance policies; however, coverage can be purchased separately. Protection from flood damaging waters can be purchased through the National Flood Insurance Program (NFIP).
  • Be cognizant of the after-effects of water damage, such as mold growth, to help you mitigate future problems with your insurance coverage before disaster occurs. Having the foresight to understand how a natural disaster will impact your property initially and companied with an understanding for the issues that may arise after the fact is the best way to cover any possible insurance gaps.
  • For more information on special coverages, covered property, how flood damaged are valued, purchasing additional coverages and estimating damages, read our Adjusting Today publication on floods or visit the NFIP’s website.

Earth Movement/Landslides/Sinkholes

  • Much to the amazement of home and business owners, earth movement, such as landslides, sinkholes and earthquakes are also excluded from common standard property insurance policies. Earth movement (or earthquake) protection is available for purchase in addition to your regular policy. Unlike typhoons and winter storms that typically affect only certain locations, earthquakes are a disaster that can happen anywhere in the United States at any time, and no state is invulnerable.
  • Earthquakes, earth movement, landslides and sinkholes can severely damage property and the contents inside. Foundations can be ruined, compromising a facilities' structure and can lead to possible collapse issues. In the aftermath of an earth movement disaster, you should have your property thoroughly inspected by a professional to ensure that all damages are identified and any future hazards contingent on the event are noted as well.
  • For more information on adding earthquake coverage, deductible issues, and specific details on insurance terminology, read our Adjusting Today publication on Earthquake Insurance.

Building Code Upgrades

When a building is damaged during a weather-related event, oftentimes the policyholder must make a decision as to whether or not to replace, repair or rebuild the property. After a severe loss, the updates made to the building must also conform to the latest building codes; many policyholders are shocked that the associated costs are not included in a standard property insurance policy.

  • Building codes are updated frequently and include issues such as:
    • Building heights
    • Fire protection (i.e. sprinkler systems, alarms)
    • Handicap accessibility
    • Interior finishes
    • Materials used in foundation, wall and roof construction
    • And more
  • One way to protect yourself from having to pay a substantial amount to comply with the latest building codes following a natural disaster is by havingOrdinance or Law Coverageadded to your standard insurance policy.
  • For more information on adding coverage to cover the additional costs, read our Adjusting Today publication on Ordinance or Law Coverage.

As a home or business owner it is vital to understand what your property insurance policy covers and what it excludes before disaster strikes. Oftentimes, insurance policies can be difficult to understand and have many exclusions and fine print. If you need help understanding what coverages you need, reach out to us today for a free consultation and analysis of your policy.

3 Things Excluded From Your Standard Insurance Policy (2024)


What are the three major types of exclusions included in insurance contracts? ›

The three major types of Exclusions are:
  • Excluded perils or causes of loss.
  • Excluded losses.
  • Excluded property.

What is excluded from insurance? ›

An exclusion is a provision within an insurance policy that eliminates coverage for certain acts, property, types of damage or locations. Things that are excluded are not covered by the plan, and excluded costs don't count towards the plan's total out-of-pocket maximum.

What are the 3 typical requirements in an insurance policy? ›

Offer, acceptance, capacity, and legality are four requirements that must be met to form a valid insurance contract.

What are the standard exclusions found in a life insurance policy? ›

Some reasons why life insurance won't pay out include: extreme sports, alcohol or drug abuse and high risk jobs. See our full list of exclusions here. Life insurance exclusions occur when your policy is denied or the insurer is not willing to pay-out on death.

What are standard policy exclusions? ›

Insurance policies have exclusions for several reasons, including: For Catastrophic Risks – A standard insurance policy does not typically cover catastrophic risks, such as wind, or wind driven rain, but sometimes coverage is available through an endorsem*nt, or a separate policy.

What are the three 3 main types of insurance? ›

Although there are many insurance policy types, some of the most common are life, health, homeowners, and auto. The right type of insurance for you will depend on your goals and financial situation. Consumer Financial Protection Bureau.

What is an exclusion in insurance with example? ›

Policy exclusions create a balance between coverage for fortuitous losses (losses you couldn't have reasonably prepared for) and the need to remain solvent in order to pay those claims. For example, a homeowners insurance policy doesn't include flood insurance.

What kind of exclusions might be included in a car insurance policy? ›

Injury to an employee: If you have an employee who is injured while working, losses should be covered under worker's compensation and not your personal auto insurance policy. Vehicle being used as a residence: An insurance company can deny coverage on a claim relating to any vehicle being used as a residence.

What are some items typically excluded from property insurance? ›

Home insurance exclusions
  • Floods. Damage caused by floods is almost always a homeowners exclusion. ...
  • Earthquakes and earth movement. Just like flood damage, damage caused by earth movement is a common homeowners insurance exclusion. ...
  • Maintenance. ...
  • Pests. ...
  • Home-based businesses. ...
  • Mold. ...
  • The full cost of high-value items.
Jun 14, 2023

What are the 3 limits of insurance policies? ›

Types of Insurance Policy Limits
  • Per-occurrence limits: The maximum amount an insurer will pay for a single event/claim.
  • Per-person limits: The maximum amount an insurer will pay for one person's claims.
  • Combined limits: A single limit that can be applied to several coverage types.
Apr 14, 2022

What are the three 3 main types of risk associated with insurance? ›

Most pure risks can be divided into three categories: personal risks that affect the income-earning power of the insured person, property risks, and liability risks that cover losses resulting from social interactions.

What 3 additional elements need to be present in an insurance contract? ›

The other elements required are specific to insurance contracts: Indemnity. Insurable Interest. Utmost Good Faith.

What is excluded in a health insurance policy? ›

As you may already know, exclusions are the services that your health plan will not pay for. Hence, it pays to ascertain beforehand what will not be covered by reading the terms and conditions in your policy before making any purchasing decision.

Where are policy exclusions found? ›

While most exclusions can be found after the main coverage sections in your policy (named perils, personal property, personal liability, additional coverage, and medical payments to others), you'll also notice exclusions in the definitions, conditions, and endorsem*nts sections.

What are exclusions and limitations in insurance? ›

Limitations are conditions or procedures covered under a policy but at a benefit level lower than the norm. Exclusions, on the other hand, are conditions or procedures that are completely omitted from coverage. Your health insurance policy should list all limitations and exclusions.

What are exclusions in a contract? ›

Also known as exemption, disclaimer, or limitation clauses, they are, as a general guide, any term which purports to restrict, modify or exclude a remedy or liability arising out of a breach; or which appears to exclude or restrict a liability or duty that would otherwise arise.

What are common exclusions to a health insurance policy? ›

Some common excluded services include: Alternative medicine (e.g., acupressure, yoga, acupuncture, massage, biofeedback) Dental services. Vision care.

What are the major exclusions in a typical homeowners policy? ›

Common exclusions in even the most comprehensive homeowners policies include: earth movement, such as earthquakes; sinkholes or landslides that damage your home; water damage, such as floods or sewer back-ups that leak through a pipe or seep through the foundation causing damage to your home; damage resulting from ...

What are the key person insurance exclusions? ›

The most common key person insurance exclusions are fraud, misrepresentation, and suicide. A claim can be denied in case of a proven instance of intentional dishonesty. During the first two years of every life insurance policy, there is a contractual clause known as the contestability period.


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