At Blue Lion Insurance Advisors, LLC, we assist businesses throughout New Jersey in obtaining insurance that can provide financial recovery in case of various types of disasters. Our clients are often confused about exclusions in Business Insurance policies — how they work and why they exist.
For example, exclusions, like other components of Business Insurance, can be complicated, which is why having a knowledgeable insurance advisor is essential. Blue Lion Insurance Advisors, LLC, is not affiliated with any insurance provider, so we are loyal only to our clients and their needs. Contact us now at (732) 649-1600 or online to discuss your best options. Our highly trained advisors are happy to answer all your questions.
What Are Business Insurance Exclusions?
Exclusions are provisions in an insurance policy that eliminate coverage for certain acts, properties, types of damage, or locations. Exclusions are not covered by the plan and do not count toward the policy’s out-of-pocket deductible.
Types of Business Insurance Exclusions
Some risks are excluded because they impact a great many policyholders at the same time and no provider could sustain the massive losses involved. Catastrophic risks include such things as wars, floods, and earthquakes. Nonetheless, some catastrophic risks can be insured under specialized policies; a typical example of this is Flood Insurance offered to businesses at a higher premium.
Insurance policies that cover physical damage to the business-owned property frequently exclude risks that are either:  inevitable due to wear and tear or  that can be prevented through proper maintenance. Examples include damage caused by daily usage, rust, corrosion, or failure to provide required maintenance, such as periodically oiling equipment or machinery. Commercial auto damage, such as tire punctures, is similarly excluded.
Intentional or Illegal Activity Exclusions
In the same vein, claims resulting from intentional or illegal acts committed by the policyholder are excluded from coverage. Otherwise, a business owner could arrange for theft or arson of the property and still theoretically be covered under Business Property Insurance.
Commercial Property Insurance only covers tangible assets, such as computers, printers, or inventory. There is no coverage for cash or for “property of others,” e.g. rented equipment. Also, Business Auto Insurance does not cover auto damage caused if the car participates in professional or organized racing or demolition activity.
Another example of a property exclusion is a “vacancy” exclusion in Commercial Property policies that excludes damage to buildings that have been vacant for more than 60 days, and are therefore more apt to suffer weather, animal or insect damage, theft, fire, or vandalism.
Exceptions to Exclusions
Insurance companies recognize that exceptions should be made for businesses in which there are unusual risks on a daily basis. Therefore, while some exclusions are absolute, others can be modified for an additional premium. In such cases, it is often more than worth the extra cost to protect the business.
An example would be an exclusion for pollutant-related damage. Though it may be reasonable for the provider to exclude as catastrophic a massive explosion involving a toxin, they may well make an exception for a company that manufactures and delivers a potentially polluting product (e.g. fertilizer) that might be spilled during a traffic accident. Once again, exceptions always come at a price.
Contact Our Experienced Insurance Advisors to Protect Your Company
Our skilled insurance advisors can help you choose the Business Insurance policies most aligned with your company’s needs. Because we are brokers, we have access to a broad range of policies. We can explain the pros and cons of each policy, including how its exclusions can affect your business. Contact us now so we can make sure your Business Insurance is Blue Lion Strong™.