Duhaime's Law Dictionary


Exclusion Clause Definition:

A clause in a contract which limits remedies one party may have in specified events; eg. a clause in an insurance contract that eliminates coverage for specified events.

Also referred to as an exclusion or an exclusionary clause.

In Dupre v Allstate, Justice Davidson of the Colorado Court of Appeals used these words:

"An exclusion is an insurance policy provision that excepts certain events or conditions from coverage...

"The essential purpose of an exclusion is to limit the scope of coverage granted in the coverage section of the policy."

Or in Kansas-Nebraska Natural Gas Company v. Hawkeye-Security Insurance Company, in which Justice White of the Supreme Court of Nebraska held:

"An exclusion is the act of expelling from a place or a position previously occupied.

"In an insurance policy, an exclusion is a provision which eliminates coverage where, were it not for the exclusion, coverage would have existed."

In Avemco Ins. Co. v. Auburn Flying Service, Justice Beam of the United States Court of Appeals wrote:

"Exclusion refers to a clause in the (insurance) policy that would eliminate coverage. Exception refers to an exception to the exclusion that would restore coverage."

In Continental Insurance Co. v. Dalton Cartage Company Limited, Chief Justice Laskin of the Supreme Court of Canada summarized the law as regards to exclusionary clauses in insurance polices, as follows:

"A long standing line of authorities require an insurer, seeking solace in an exclusion from otherwise unlimited liability, to show that the exclusion applies."

In BC Rail v Home Insurance Company, Justice Cummings of the Court of Apeal of British Columbia adopted these words:

"I am satisfied, as a basic principle of all cases of this nature, that there is an onus on the insurer of establishing that the exclusion does not apply under the circumstances and that if there be ambiguity' as to whether or not the exclusion does apply the matter be resolved against the insurer."

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