The denial of a home or auto insurance claim can be frustrating, disappointing, and costly. Unfortunately, many people don’t read through their insurance policies carefully, and when it comes time to file a claim, they find out that an exclusion applies to their particular circumstances. Despite the length of these contracts and the complicated legalese therein, you should always read your policies in their entirety so you know exactly what’s covered and what’s not.
In this article, we will discuss the purpose of insurance exclusions, examine some of the most common auto and home insurance exclusions, and explain what you should do if your claim has been denied due to a policy exclusion.
What Is the Purpose of Insurance Exclusions?
Insurance exclusions narrow the scope of coverage provided by the insurance contract. Insurers use exclusions to avoid covering the risks they are unwilling to insure. Common reasons for insurance exclusions include:
- The risk is likely to affect many policyholders at once, so covering that risk would not be economically feasible for the insurer;
- The risk is typically covered by another type of insurance policy;
- The risk is easy for the policyholder to control—for example, home insurance policies may not cover personal property that was left outside and damaged by rain, snow, or other inclement weather;
- The risk occurs naturally (e.g. damage caused by wear and tear); or
- To protect the insurance company from covering losses that were intentionally caused or that result from illegal activity.
Most insurance policy contracts include provisions that exclude or limit coverage for certain kinds of claims, as well as various exceptions and exemptions from those exclusions. Insurance policy exclusions must be conspicuous, plain, and clear—and must not violate existing statutes—in order to be enforceable. Insurance exclusions have been the subject of repeated litigation in bad faith actions and insurance coverage lawsuits.
What Are Some Common Auto Insurance Exclusions?
In the state of California, the only permissible exclusions from coverage for a car insurance liability policy are listed in Insurance Code Section 11580.1. Those exclusions, which also apply to the insurer’s duty to defend, include:
- Liability that the insured has assumed under contract;
- Liability for property damage or bodily injury that was caused intentionally or under the direction of the insured;
- Liability assumed by or imposed upon the insured under workers’ compensation law;
- Liability for the bodily injury of an employee that occurred in the course of his or her employment;
- Liability for bodily injury to the insured or liability for bodily injury to the insured when the benefits of that indemnification accrue indirectly or directly to the insured;
- Liability for damage to property owned by, transported by, rented to, or in the charge of the insured;
- Liability for property damage or bodily injury with respect to which insurance is or can be afforded under a nuclear energy liability policy; or
- Any motor vehicle or class of vehicles designed or described in the policy with respect to which coverage is explicitly excluded, either in part or in whole.
Below are a few examples of common exclusions in auto insurance policies that can lead to a claim denial:
- The driver was operating a vehicle in Mexico and was hit by an uninsured motorist, but his or her UM policy excludes car accidents that happen outside of the United States;
- The owner of the vehicle let a household resident operate his or her vehicle who was not identified in the policy, or to whom a “named driver exclusion” applied; or
- The driver intentionally crashed the vehicle.
What Are Some Common Home Insurance Exclusions?
Most home insurance policies (even so-called “All Risks” policies) contain specific coverage exclusions. Sometimes it is possible to purchase additional insurance policies to cover the risks that are excluded from a home insurance policy. Below are a few examples of common home insurance exclusions:
- Losses caused by dog bites from certain aggressive breeds such as pit bulls, Doberman pinschers, chow-chows, and akitas;
- Losses caused by earthquakes;
- Losses caused by lightning or fire;
- Losses caused by explosions;
- Losses caused by riots;
- Losses caused by smoke;
- Losses caused by theft;
- Losses caused by vandalism;
- Losses caused by volcanic eruption;
- Losses caused by aircraft;
- Losses caused by freezing of HVAC or plumbing system;
- Losses caused by earth movement;
- Losses caused by flooding;
- Losses caused by neglect;
- Losses caused by war;
- Losses caused by government action; and
- Intentional losses.
What Should I Do If My Insurance Claim Has Been Denied Due to an Exclusion?
If your auto or home insurance claim has been denied, your first call should be to an insurance bad faith lawyer. Be sure to bring any relevant evidence to your initial consultation including your insurance policy, photos, names and contact information of the parties involved, and correspondence with the insurer.
Your attorney can assess your policy to determine if the denial may have been unlawful. Your lawyer can also follow up with the insurance company to find out if the claim denial was a mistake. If the insurance company unlawfully refuses to approve your claim, your attorney can help you bring an insurance bad faith claim against the insurer.
Insurance Claim Denied? Speak with a Personal Injury Attorney in Long Beach
Your Injuries Are Personal to Me
Finding out that your auto or home insurance claim has been denied can be a frightening experience. At the Law Office of Michael D. Waks, we can review your insurance policy and any supporting evidence you’ve gathered to determine the most strategic way to dispute the insurance company’s decision.
Attorney Michael D. Waks has successfully litigated many cases involving insurance coverage exclusions and has forced insurance companies to indemnify and defend policyholders whose claims were wrongfully denied. He is well-versed in the laws pertaining to insurance bad faith in California, and he has the resources and experience to take on even the largest insurance carriers. To schedule a consultation, call (562) 206-1939 or use our Contact Page to send us a message online.
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