Exclusion

An exclusion is a clause in your insurance policy that removes specific situations, activities, or types of damage from coverage. Exclusions do exactly what the name says: a claim that falls under one gets nothing — no payout and, in most cases, no funded legal defence — no matter how high your liability limit is. A typical Canadian home policy's personal liability section carries a dozen or more of them.

Why it matters to you#

Most people read the front of the policy — the coverage grants and the big limit — and stop there. The exclusions are where the policy actually gets decided. A $1 million or even $5 million limit means nothing for a claim the policy excludes, which is why the honest reading order is exclusions first, coverage second. Common personal-liability exclusions on Canadian home policies include: intentional or criminal acts; business or professional activities run from the home; claims by one member of the household against another; larger watercraft and many off-road vehicles; and liability you assumed purely by signing a contract. Wording varies meaningfully between insurers, so the only exclusion list that matters is the one in your policy.

In practice#

• You rent your basement on Airbnb a few weekends a year. Many home policies exclude business use — and short-term renting can count. A guest's injury claim could be denied outright unless you've added a short-term rental endorsement.
• You own a 40-horsepower fishing boat. Home policies commonly cover only small, low-power watercraft; above the thresholds, liability from the boat is excluded unless separately insured or endorsed.
• Umbrella policies have exclusions too — often a shorter list than the base policy, but never zero. "Umbrella" does not mean "everything."

The fix for a bad exclusion surprise is knowing about it in July, not discovering it in a statement of claim. Find out where your real gaps are. Take the 2-minute Lawsuit Exposure Quiz →