In insurance, what is the term for a clause that limits coverage in the event of specific circumstances?

The term that accurately describes a clause that restricts coverage under certain circumstances is an exclusion. Exclusions are vital components of insurance policies as they clearly outline specific situations, conditions, or types of losses that the insurance will not cover. This helps both the insurer and the insured understand the boundaries of the policy and avoid any misunderstandings regarding what is included or not included in coverage.

For instance, a health insurance policy may have exclusions for particular pre-existing conditions, or a homeowner's insurance might exclude coverage for flood damage. Understanding these exclusions allows policyholders to make informed decisions about their insurance needs and to seek additional coverage if necessary.

In contrast, inclusion refers to what is covered under a policy, limitations set caps on the amount the insurer will pay, and provisions are general terms and clauses that describe the rights and responsibilities of both the insurer and the policyholder. These concepts, while related, do not specifically address the limitation of coverage due to certain circumstances.