When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)?

When an insurer issues a policy that explicitly refuses to cover certain risks, this practice is known as an exclusion. An exclusion specifies particular risks or circumstances that the insurance policy will not compensate for, thereby clearly outlining the boundaries of coverage. By including exclusions in a policy, the insurer defines what is not covered, helping to manage potential claims and ensuring that both the insurer and the insured have a mutual understanding of the policy's limitations. This is crucial for the policyholder as it sets clear expectations regarding the coverage provided.

In contrast, exemptions typically refer to conditions where coverage might be granted despite standard restrictions. Limitations might indicate restrictions on the amount or duration of coverage rather than outright exclusions of specific risks. A deductible is an amount that the insured must pay out-of-pocket before insurance coverage kicks in, rather than a refusal to cover certain risks altogether. Understanding what exclusions exist in a policy helps consumers make informed decisions about their coverage options and any potential risks they may need to manage independently.