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3. What are the usual "exclusion clauses" in an insurance policy?

There are "exclusion" clauses in most insurance policies. If a situation stated in an exclusion clause applies, a loss arising from that situation would not be covered under the insurance policy even if the loss results from the specified events or uncertainties which the insurance policy is supposed to protect against.


Exclusion clauses operate to carve out certain situations from the insurance coverage under an insurance policy. Exclusion clauses are put in insurance policies usually because of the following two reasons. Firstly, sometimes the magnitude of the risk associated with the situation referenced in the exclusion clause is so significant and unpredictable, that the insurance company simply cannot provide insurance coverage for it. Secondly, the situation is covered under another type of insurance policy and therefore the exclusion prevents overlap in coverage between the two different types of insurance policies.


There are different types of exclusions for different types of insurance policies. An exclusion clause may apply generally in respect of the whole insurance policy, or may only apply to specific sections of the insurance policy. In certain circumstances, an exclusion clause may be limited or removed by the policyholder paying an additional premium to the insurance company.


The following are some examples of exclusions in respect of certain types of insurance policies.


Life insurance: the insured person commits suicide within the first two years after the insurance policy is issued; certain activities considered to be dangerous such as flying other than with a regular scheduled airline, hang-gliding, motor-car racing , scuba- diving or skydiving ; exclusions arising from death during war.


Medical and hospitalization insurance: self-inflicted injury or suicide; pregnancy and childbirth; existing illness or disease prior to the insurance being effected; AIDS or AIDS Related Complex; intoxication by alcohol, narcotics or drugs not prescribed by a registered medical practitioner; and injury, sickness or accident sustained or medical treatment received outside of Hong Kong.


Property insurance: war; acts of terrorism; flooding; pressure waves caused by aircraft or other aerial devices travelling at super-sonic speeds; radiation from nuclear fuel or combustion of nuclear fuel; asbestos pollution or contamination; and fines, penalty, punitive or exemplary expense.


Motor vehicle insurance: modified vehicle; where reasonable care was not taken to protect the vehicle; operation of the vehicle not within the law; use of the vehicle other than for the declared or specified purpose; driving while under the influence of alcohol, narcotics or illegal drugs; unlicensed driver; excess load; unlawful purpose; and unsafe condition of the vehicle.


(Note: The above are examples only. You should carefully check all the actual exclusion clauses written in your particular insurance policies.)