New York Insurance Exam Practice Question
What is the purpose of a policy's exclusion clause?
Correct Answer: B
Rationale: The exclusion clause in a policy serves to specify risks that are not covered, helping policyholders understand the limitations of their coverage.
Option A is incorrect because listing covered perils pertains to the inclusions of the policy, not exclusions.
Option C is misleading; while exclusions may affect premiums indirectly, their primary purpose is not to increase costs but to clarify coverage.
Option D is also incorrect, as exclusions do not guarantee claims approval; rather, they outline circumstances under which claims will not be honored. Understanding exclusions is essential for managing expectations regarding policy coverage.
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