QBE HK Thought Leader Series: EP3 What is “insurance exclusion” and what are some important exclusions you should be aware of?

Insurance exclusions are specific wordings in a policy which means that insurers won’t pay out a claim in the event they are triggered. They are specifically written in the policy to make clients aware of the policy’s limitations and to make it as clear as possible what is covered when making a claim.

For example, a cargo policy will cover all risks of loss of or damage to the cargo. However, these policies exclude “insufficiency of packing” for fragile items and rotten foods caused by “delay” of delivery.

The packing process is usually carried out by the suppliers known as ‘third parties". The packing or preparation must be sufficient ‘to withstand the ordinary incidents of the insured transit’, according to the Institute of Cargo Clauses. The insurer is also not responsible for ordinary wear and tear during the journey, or any ordinary loss of volume of leakage.

The delay clause is a policy exclusion for loss, damage or deterioration arising, specifically from delay. This exclusion appears in almost every marine cargo insurance policy. While each scenario is different, if the essential reason is delay then the policyholder will not be covered. Another exclusion includes the insolvency or financial default of the owner, managers or operators of the ship. 

Other potential policy exclusions for marine policies, such as war and strikes & riots, can be bought back by extensions.

Common policy exclusions can include major natural disasters such as typhoons, earthquakes and volcanoes. 

Before purchase, customers should check their policies closely and ask any questions they have about exclusions before buying.

This article is sponsored by QBE Hong Kong. If you have any inquiries about our risk management and insurance solutions, please contact us at expert@qbe.com.

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Reference: 

- Evolution of Insufficiency of Packing Clause in Cargo Insurance 
https://www.linkedin.com/pulse/evolution-insufficiency-packing-clause-cargo-insurance-alan-jervis/  

- Marine Cargo Insurance: Coverage, Claim & Exclusions https://www.paisabazaar.com/commercial-insurance/marine-cargo-insurance/  
   
- Exclusion
https://www.biba.org.uk/publication/exclusion/