What does the term "exclusion" mean in an insurance policy?

The term "exclusion" in an insurance policy refers to specific conditions or circumstances that are explicitly not covered by the insurance. This means that in the event of a claim arising from these exclusions, the insurer will not provide coverage or financial compensation. Understanding exclusions is crucial for policyholders because it allows them to know what risks they must manage independently. For instance, many home insurance policies exclude coverage for flooding or earthquakes, which means additional separate policies might be needed to protect against those risks. By clearly outlining exclusions, insurers set the boundaries of their coverage, helping to avoid confusion during the claims process.