Definition

A cap on the amount of risk covered by your insurance for a single incident. It ensures that even large claims have a defined maximum payout.

What to consider

  • Carefully read the exclusions in your policy.
  • Know what is not covered before a claim occurs.
  • Discuss exclusions with your agent if unclear.

Real world scenarios

  • A travel insurance policy includes a policy exclusion for adventures in high-risk areas.
  • A health plan excludes cosmetic procedures as a policy exclusion.
  • A homeowner’s policy lists certain types of water damage as policy exclusions.

Related terms

Insurance & Financial Protection