What is the main purpose of specifying exclusions in an insurance contract?

Specifying exclusions in an insurance contract primarily serves to clarify the limitations of coverage. Insurance policies are complex documents that outline the protection provided, but they also need to explicitly state what is not covered. This helps policyholders understand the scope of the policy and avoid assumptions about coverage that may lead to conflicts or denied claims in the future.

Exclusions can highlight scenarios, types of damage, or specific conditions under which the insurer will not provide coverage, allowing for greater transparency and informed decision-making for both the insurer and the insured. By clearly defining what is not included in coverage, exclusions prevent misunderstandings and provide both parties with clear expectations regarding risk and liability.