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Simple English definitions for legal terms
business-risk exclusion
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A quick definition of business-risk exclusion:
A business-risk exclusion is a rule in some insurance policies that says they won't cover certain things that happen in a business. This includes things like damage to the business's product, problems with contracts, or recalls of products. It's like saying, "We won't pay for things that are just part of doing business." This helps insurance companies avoid having to pay for things that are expected to happen in a business, and it helps businesses understand what they can and can't expect from their insurance policies.A more thorough explanation:
A business-risk exclusion is a provision in some commercial general liability insurance policies that excludes coverage for common risks associated with doing business. This includes harm to the insured's product or work, damages arising from a product recall, damages arising from the insured's failure to perform under a contract, or damages arising from a failure of the insured's product to perform as intended.
For example, if a company manufactures a faulty product that causes harm to a consumer, the business-risk exclusion may prevent the company from being covered for any resulting damages or lawsuits. Similarly, if a company fails to fulfill a contract with a client, the exclusion may prevent coverage for any resulting damages or legal action.
The purpose of the business-risk exclusion is to limit the liability of insurance companies and encourage businesses to take responsibility for their own risks and losses.