Feeling Left Out? Five Surprising Insurance Exclusions

Written by Amelia Gray on February 3, 2010 & Posted in Insurance

When it comes to insurance, unexpected exclusions could mean a lot to your bottom line. So before you purchase coverage (of any kind), make sure the policy you're considering fits your lifestyle, and vice versa.

An exclusion in coverage means that--for some reason--your insurance is not required to pay benefits or cover costs. And such exclusions can range from the mundane to the bizarre. For example, one insurance company excluded baseball legend Mark McGuire's famously fragile ankle from coverage. His team had to purchase a special policy that would pay out only if he became unable to play due to an injury to that ankle. The insurer carefully spelled out exactly which ligaments, bones, and tendons constituted McGuire's ankle.

Exclusions you don't expect can be costly. Here are five reasons to carefully read every policy you purchase.

Auto Insurance: Don't Marry a Lousy Driver
Some exclusions might not even be dictated by your insurance company. In some cases it's a state law. Suppose your husband is driving you to a dinner party while talking on his cell phone. He drives into a tree and you sustain lifelong debilitating injuries. Can you sue him and recover money from his (your) insurance company? Probably not in most states--due to laws designed to prevent spouses from cooking up auto claims and defrauding their insurers. But it gets even more complicated depending on where you are. In Alabama, you wouldn't be able to collect if your husband's negligence caused the accident. But if you grabbed his cell phone while he was driving and caused him to drive off the road, he could sue you. Go figure.

Accidental Death and Dismemberment Insurance: Die Quickly
Accidental Death and Dismemberment (AD&D) insurance is considered a cheap form of life insurance for young healthy people (who are more likely to be involved in accidents but less likely to become gravely ill). However, these policies can be rife with exclusions. For example, many policies require that you die within 90 days of your accident in order to pay benefits. On the ninety-first day your death becomes worthless. In addition, your policy probably won't pay if you get killed while driving intoxicated, participating in a riot, or mountain climbing higher than 20,000 feet.

Travel Insurance: Get Your Shots or Else
Travel insurance can be your best line of defense if you hurt yourself skiing in Austria or the shellfish in Tahiti disagrees with you. But if you get Yellow Fever in the Bahamas, you might be out of luck. Your insurer could deny coverage for "treatment of tropical diseases for which vaccination is required." Smart travelers check out required vaccinations for their destinations--saving their health and their money.

Life Insurance: No Exam Could Mean No Coverage
Life insurance policies can be obtained without being subjected to a medical exam--but insurance companies know that people who purchase "no exam" life insurance are likely to have conditions that would prevent their acceptance into traditional whole life or term policies. So these policies carry exclusions that prevent benefits from being paid if you die of an illness or medical condition during the first two or three years. In effect, the policy starts out as an accidental death policy--and only becomes true term life insurance if you hang in there long enough.

Homeowners' Insurance: Something Smells
A sewage backup is one of the most disgusting mishaps that can happen to a house. And once your basement is flooded with putrid stuff and the whole place reeks, you aren't going be happy finding out that the damage isn't covered under most standard policies. And the potential for destruction isn't limited to basements--broken sewer lines can cause toilets in any part of your home to overflow. You can avoid that "insult to injury" feeling by adding a relatively inexpensive rider to your standard coverage. It won't make the sewage smell better, but at least someone else will have to worry about cleaning it up.

Check the small print on your insurance plans to find unusual exclusions. Your insurance agent can work with you to determine how to handle exclusions in your life, health, home, and auto insurance.

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About the Author

Amelia Gray is a freelance writer in Austin, TX. Amelia earned a bachelor's degree in English Literature from Arizona State University and an MFA from Texas State University.


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