What does excluded coverage typically protect an insurer from?

Excluded coverage is designed to delineate the boundaries of an insurance policy by explicitly stating what is not covered under the terms of the agreement. One of the main purposes of excluding certain types of coverage is to protect insurers from liabilities that arise from intentional acts committed by policyholders.

When a policyholder intentionally causes damage to their property or the property of others, it creates a situation where the insurer should not be held responsible for the financial repercussions. This is because allowing coverage for intentional damages would undermine the principle of insurance, which is meant to protect against unforeseen and accidental losses rather than premeditated actions. Exclusions for intentional damages ensure that insurers are not liable for losses that result from reckless or malicious behavior, thereby maintaining the integrity and financial stability of the insurance system.