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Even if you have auto insurance, there are still instances, called exclusions, when your policy won't provide coverage. Why should exclusions exist in an insurance contract? There are several different reasons. Exclusions are used to do the following:

·         help contain the expense of providing insurance;

·         prevent coverage under one type of policy that should be covered; and

·         prohibit coverage for losses that are against public policy.

Let's look at these reasons more closely.

Help Contain The Expense Of Providing Insurance

If your auto policy had to cover every imaginable loss, it would have an unimaginable premium. Auto insurance is affordable only if insurance companies can exert some control over the losses their policies can be expected to cover. Therefore, automobile policies generally contain exclusions against accidents which involve:

·         injuries caused directly or indirectly by a nuclear weapon, reaction radiation or contamination; or by war, civil war, insurrection, rebellion or revolution.

·         injuries involving any vehicle inside a facility designed for racing while preparing for, or competing in, a race.

The first instance involves losses that are beyond any insurance company's ability to control and to pay for. The second instance involves losses that are strictly under an individual's control (so it isn't accidental). Insurance companies certainly want to avoid situations where their customers choose to put themselves and their cars in an excessively dangerous position.

Prevent Coverage Under One Policy When It Should Be Covered Elsewhere

Most automobile policies won't provide coverage for a loss or injury which:

·         happens while in a vehicle that has fewer than four wheels

·         occurs while the vehicle is transporting persons or property for profit

·         happens while the vehicle is being used as a residence

·         occurs while on the job, and workers compensation coverage is either available or required for the bodily injury

·         takes place while an insured is using a vehicle he owns or has regular access to but the vehicle is not listed on the automobile policy.

·         involves a vehicle that's being used in an insured's "business."

Please refer to part 2 of this article for additional discussion.

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