What is the function of exclusions in a property policy, and which are typical exclusions?

• A. They remove coverage for specific risks; examples: flood (requires separate NFIP), earthquake
• B. They expand coverage for additional risks not originally covered
• C. They apply only to liability, not property
• D. They provide coverage for wear and tear automatically

Answer: (B)

Exclusions are the part of a property policy that limit what the insurer will cover. They remove coverage for specific risks or situations, not add new ones. For example, protection against flood is usually not included in a standard property policy and instead requires a separate flood policy (often through the NFIP). Earthquake is typically excluded unless you add a separate endorsement or policy. Other common exclusions include wear and tear or gradual deterioration, intentional acts, neglect, and certain hazards like war, nuclear incidents, and government actions. The idea is to focus the policy on sudden, accidental losses and reflect the insurer’s risk assessment. If you want protection for risks beyond the standard coverage, you’d look to endorsements or riders rather than relying on exclusions changing the policy.