What are they and how do they work?
There are three reasons you would be asking this question.
- You have read your policy document and you have found the standard policy exclusions
- You have additional exclusions on your policy
- You have been advised you may have exclusions on your insurance policy you are applying for.
Simply put, an exclusion is a condition or situation that is not covered by your policy. From the previous statement, you will have picked up there are different types.
Standard Policy Exclusions
The first one to address is the standard policy exclusions. These are the standard things/events you will not have cover for on your policy. With Life Cover, it is common to have suicide excluded for the first 13 months. With Trauma and Disability covers, self-inflicted injuries are often excluded from cover and some Trauma benefits will not be covered if you have symptoms within the first 90 days of coverage.
These situations are standard on good cover and some of them you can have waived if you are transferring insurance cover, up to the same sum assured for the same benefit type. Your adviser will ask about that if you are transferring your cover.
Where you need to be a little wary is where there are additional standard policy exclusions. For example, some life cover has exclusions for dying while intoxicated or participating in a criminal act.
You might have had a few to drink and then die in a situation that is unrelated to you having a few drinks, an intoxication exclusion could mean you are not covered by that particular policy. Likewise, if you are driving a car and speeding, have an accident and die, the participating in a criminal act clause could be used to avoid paying a claim.
Both of these examples are at the extreme end, but fall within the boundaries of these exclusions.
If you have concerns about your cover with your standard policy exclusions, check your policy wording or Contact Us to review things for you.
Medical and Activity Exclusions
The other types of exclusions are for something you have, may get or do. This is something you will have a separate schedule in your policy for and your adviser should have discussed this with you. If you have bought your policy directly from an insurance company, you will need to double-check your policy document.
Keep in mind, an exclusion may be alarming at first but it is not the end of the world and your policy may still cover you for a significant part of your risks.
If you have, an exclusion there will be a reason for it. You may have had something in your past that would indicate there is a higher than normal risk or you may be participating in an activity that the insurance company is not prepared to cover.
With exclusions that are medical based, if you think what is excluded is a problem then the insurance company probably has it right. Insurance companies manage risk, specifically unknown risk; if you have something in your medical history then the chance of it re-occurring is higher. This identified risk is something the insurer is not prepared to take on, thus the exclusion. If you think what is excluded will never be a problem then having it excluded it is not what you need to focus on.
The types of exclusions that are common for existing conditions are; heart disease and cancer conditions for trauma. For income protection back and mental health conditions are often excluded. When it comes to medical insurance, expect exclusions for anything you have had treatment for.
On the other side, activity based exclusions can be a different matter altogether, flying, diving, motor racing and martial arts are common activities excluded, job things like mining and forestry are also common. These exclusions are based on how hazardous the activity is, not what safety precautions you take. Historical safety data gives the insurance company the basis for what they will and will not exclude in this area.
Talking to an adviser for activity situations can be key, as different insurers have a different approach to these. For example; standard NZ stock car racing, most insurers will offer to exclude but one or two will offer coverage at standard premium rates and some will give the choice to excluded or pay a higher premium.
Another often asked question is why flying?
There are two reasons, the safety rating of private aircraft in New Zealand is quite low, meaning the risk of something happening is much higher than people realise.
The second is to do with disability covers where the medical requirements for the job as a pilot are much higher than for someone on the ground. If you develop high blood pressure you could be put off work as a pilot until it is under control, being in any other occupation you could still work and carry out your normal duties.
If you have concerns about your cover and policy exclusions, check your policy wording or contact us to review things for you.