Business insurance policies typically contain several exclusions within the contract that limit or eliminate coverage for certain types of risks. Understanding what exclusions exist in your contract and how they may affect your company are critical to protecting against future issues. In some cases, insurance companies may try to deny coverage based on an exclusion that does not actually apply.
At the Saxton Law Firm, our business insurance attorneys help you understand exclusions and limitations in business insurance policies. We tell you what you need to know to protect your company and help you fight back against insurance coverage denials.
What Are Business Insurance Exclusions and Limitations?
Insurance exclusions or limitations are stipulations built into your insurance contract. They eliminate or reduce coverage for certain risk types. These provisions may be very specific or may be incredibly broad. For example, one common exclusion or limitation occurs if your company allows an inexperienced driver to operate a company vehicle.
Some limitations are much narrower, and may be designed specifically around your business. For example, many commercial insurance contracts have a vacancy exclusion for business premises. If your business premises remain unoccupied for a certain number of days, you may lose coverage altogether.
Common Types of Excluded or Limited Categories
What exclusions or limitations exist in your policy depend on your individual insurance contract. However, there are many types that you will commonly find in business insurance agreements. Some apply to very narrow categories while others are much broader.
A few common exclusion and limitation categories include:
- Catastrophic Events: Catastrophic exclusions or limitations are common. These might include damage from floods, earthquakes, and wars. These events can affect thousands of policyholders at once, creating a substantial risk for the insurance company. Specialized endorsements or policies often help cover areas otherwise excluded, such as by using FEMA flood insurance.
- Illegal or Intentional Acts: Most policies exclude illegal or intentional acts done by the insured, especially if it was for the purpose of creating a claim.
- Maintenance: Many policies exclude coverage for coverage of ordinary maintenance needs or damage that stems from failure to perform regular maintenance.
- Covered Elsewhere: Most insurance policies state that they do not cover where other insurance does. For example, your general liability policy will not usually cover vehicle liability claims, because your automobile insurance provides that coverage.
How To Find the Exclusions and Limitations in Your Business Insurance Policy
Anytime you purchase insurance, you should carefully review the document and make note of all exclusions. They are typically listed in the coverage section of your business insurance policy. They may instead be located in the coverage description.
You can also speak with your insurer about what exclusions are in your policy. Your business may need to purchase additional coverage to cover any gaps you are concerned about. Often, the purchase of a “rider” acts as an add-on to your existing coverage to help address any areas of concern.
READ MORE: Overview of Business Insurance Law in Kansas
You can always ask a skilled business insurance lawyer about your policy as well. These contracts are purposely dense and confusing. Some exclusions may be in an amendment or buried inside of massive paragraphs. An insurance company may instead say that your claim fits within an exception or limitation, when it really should not.
A dedicated business insurance attorney knows how to help. We put our decades of experience to work for you. Contact Saxton Law Firm for a FREE case review!