Insurance might not be the most thrilling topic, but for small business owners and everyday Texans alike, it is one of the most important. Many policyholders do not fully understand what they are actually buying, and as attorneys, we often see the consequences of that misunderstanding. Whether it is your auto, home, or business policy, understanding what is excluded is just as important as knowing what is covered.
Insurance Is Built on Exclusions
The core of the insurance business model is simple. Collect as many premiums as possible while minimizing payouts. Insurance companies accomplish this by selling policies filled with exclusions. These exclusions are the real substance of your insurance contract. The glossy brochure might say “covered for damage,” but the fine print will list all the scenarios where that coverage does not apply.
In Texas, most insurance policies follow similar structures. The beginning of the policy outlines general coverage. But hidden deeper in the document are the exclusions — the parts that say what is not covered. This section is often what determines whether your claim gets paid or denied. Under the Texas Insurance Code Section 541, insurers have a duty to handle claims fairly and in good faith, but that does not mean they will pay claims they have clearly excluded.
The Smart Move: Review and Understand
If you are feeling overwhelmed by your insurance paperwork, the best starting point is at the end. Most policies are long and full of legal language. Skip ahead and read the exclusions section first. This is where you will learn what scenarios your policy specifically does not cover. Ask yourself, based on what is excluded, is this still a good value?
This is especially important for business owners, who may have multiple policies — general liability, property, professional liability, commercial auto, and more. Each of these will have exclusions. For instance, a property policy might exclude flood damage, or a professional liability policy might exclude certain types of negligent acts. Understanding these details can make or break a future claim.
All information provided on Silblawfirm.com (hereinafter "website") is provided for informational purposes only, and is not intended to be used for legal advice. Users of this website should not take any actions or refrain from taking any actions based upon content or information on this website. Users of this site should contact a licensed Texas attorney for a full and complete review of their legal issues.