A loss for which there is no protection under insurance policy terms is an ______.

A loss for which there is no protection under insurance policy terms is an ______.

• A. Exclusion
• B. Endorsement
• C. Liability
• D. Hazard

Answer: (A)

In insurance, when a loss isn’t covered by what the policy says, that loss is called an exclusion. Exclusions specify the perils or situations the insurer won’t pay for, such as certain natural disasters or intentional acts, unless you obtain additional coverage or an endorsement. An endorsement would actually add or broaden coverage, not define something that isn’t covered. Liability refers to your legal responsibility to others, not a type of non-covered loss, and a hazard is a condition that raises risk, not a classification of uncovered losses. So the best fit for a loss with no protection under the policy terms is an exclusion. For example, many homeowner policies exclude flood damage unless you carry separate flood insurance.

In insurance, when a loss isn’t covered by what the policy says, that loss is called an exclusion. Exclusions specify the perils or situations the insurer won’t pay for, such as certain natural disasters or intentional acts, unless you obtain additional coverage or an endorsement. An endorsement would actually add or broaden coverage, not define something that isn’t covered. Liability refers to your legal responsibility to others, not a type of non-covered loss, and a hazard is a condition that raises risk, not a classification of uncovered losses. So the best fit for a loss with no protection under the policy terms is an exclusion. For example, many homeowner policies exclude flood damage unless you carry separate flood insurance.