Business insurance covers sudden, accidental and unforeseen events — so the standard exclusions across almost every commercial policy are the things that are none of those: wear and tear and gradual deterioration, deliberate or fraudulent acts, circumstances you already knew about before buying, damage at premises left unoccupied beyond a stated period, liability you assumed by contract beyond what common law would impose, cyber and data losses under a property policy, and war, terrorism and nuclear risks. Policies also exclude what belongs on another policy — your employees' injuries belong on WICA cover, your own faulty workmanship is usually excluded from liability wordings, and financial loss from bad advice sits on professional indemnity rather than public liability.
The exclusions almost every policy has
- Wear, tear and gradual deterioration. Insurance covers sudden events, not ageing. Rust, corrosion, damp, gradual leaks, mechanical breakdown from age and general depreciation are excluded. A roof that has been leaking for two years is a maintenance bill, not a claim.
- Deliberate, reckless and fraudulent acts. Damage or loss you or your directors caused intentionally is excluded, and fraud in a claim typically voids the whole policy. Recklessness — ignoring an obvious hazard — often falls the same way.
- Known circumstances and prior claims. Anything you were aware of before the policy started is excluded. This bites hardest on claims-made covers such as professional indemnity, where a dispute you knew was brewing when you bought the policy will not be covered.
- Unoccupied premises. Most property wordings restrict or exclude cover once premises are unoccupied beyond a stated number of consecutive days. Seasonal closures, renovations and business pauses are exactly when this is forgotten.
- Contractual liability beyond common law. If you signed an indemnity broader than the liability the law would have imposed on you, the extra portion is typically excluded unless the insurer has endorsed it. This is why lease and subcontract indemnity clauses matter so much.
- Cyber and data under property policies. Conventional property, fire and business interruption wordings generally exclude cyber events and loss of data. Ransomware that halts your operations is not a fire claim.
- War, terrorism, nuclear and radioactive risks. Standard exclusions across the market, though limited terrorism cover can sometimes be bought back.
- Fines and penalties. Regulatory penalties imposed on you are typically excluded or insurable only where the law permits — do not assume a policy will pay a fine.
- Pollution and contamination. Usually excluded except for sudden and accidental events, and often excluded entirely in higher-risk trades.
- Undisclosed activities. Not always a named exclusion, but the practical effect is the same: if the policy describes an office and you were working at height on a client's site, the wording may not respond.
Exclusions by policy type
| Policy | Commonly excluded | What responds instead |
|---|---|---|
| Public liability | Injury to your own employees; damage to property in your care, custody or control; faulty workmanship itself; professional advice; contractual liability beyond common law | WICA insurance; care-custody-control extension; PI; endorsed contractual liability |
| Professional indemnity | Bodily injury and property damage; known circumstances before inception; fraud; guarantees of profit or outcome; trading debts | Public liability; nothing — known circumstances are uninsurable once known |
| Property / fire | Wear and tear; gradual damage; unoccupancy beyond the stated period; cyber and data; the contents of your own faulty work | Maintenance; unoccupancy endorsement; cyber insurance |
| Business interruption | Losses with no underlying insured physical damage, unless a specific extension applies; losses beyond the indemnity period; cyber-driven interruption | Contingent BI, denial of access or cyber BI extensions where available |
| Cyber | Bodily injury and property damage; upgrade costs beyond restoring the prior state; regulatory fines where uninsurable; failures you knew about and did not patch | PL and property; the business's own capex budget |
| Commercial motor | Unlicensed or unauthorised drivers; use outside the stated purpose; goods being carried, as distinct from the vehicle; wear and tear | Correct driver declarations; goods in transit cover |
| Contractors' all-risks | Defective workmanship and materials themselves (as opposed to resulting damage); liquidated damages; work outside the described contract | Rectification at your cost; design and defects extensions where available |
| WICA insurance | Non-employees; injuries outside the scope of the Act; the sole proprietor or self-employed owner themselves | Public liability for third parties; personal accident cover for owners |
Wordings differ between insurers. Treat this as a map of where to look in your own policy, not as a description of it.
Why the exclusions are where the disputes are
Every commercial claim runs through the same three questions: is this the kind of event the policy insures, does an exclusion apply, and were the policy conditions met? The first is usually easy and rarely argued. Almost all disputes live in the second and third.
The patterns that recur:
- Gradual vs sudden. Was the water damage a burst pipe (covered) or a slow leak that had been staining the ceiling for months (excluded)? Insurers ask when you first noticed.
- Knowledge timing. On claims-made covers, when did you first become aware of a circumstance that might give rise to a claim? A week either side of inception changes the answer entirely.
- Condition breaches. Failure to maintain, failure to secure premises, failure to notify promptly, failure to comply with a fire protection warranty. Conditions can defeat a claim that no exclusion touches.
- Scope of the insured activity. The declared occupation defines the perimeter. Work outside it is where growing businesses get caught, because the policy was written for what they did three years ago.
Practical consequence: notify early and in writing. Most wordings require notification of circumstances that might give rise to a claim, not just of claims — and late notification is itself a common ground for declinature.
Gaps you can close, and gaps you cannot
Often closeable by extension or endorsement:
- Care, custody and control — for damage to property you are working on or holding.
- Contractual liability assumed under a specific lease or subcontract, once the insurer has seen the wording.
- Unoccupancy, where you tell the insurer in advance and accept conditions.
- Goods in transit, and property away from your premises.
- Cyber-driven business interruption, via a cyber policy rather than the property policy.
- Terrorism, in limited forms, in some markets.
Generally not closeable:
- Circumstances you already knew about. Once known, they are not fortuitous, and no market will insure them.
- Deliberate or fraudulent acts.
- Wear, tear and maintenance costs — these are budget items, not risks.
- Trading losses and bad debts from ordinary commercial decisions.
- The cost of doing work correctly that you did badly the first time. Liability policies cover the damage your bad work causes to others, not the price of redoing your own.
How to read your own wording in twenty minutes
You do not need to read the whole policy. Read these parts, in this order:
- The schedule. Insured entity name, business description, limits, sums insured, excesses, policy period. Check the business description matches what you do today.
- The general exclusions. Usually a short list applying across the whole policy.
- The section exclusions for each cover you actually rely on.
- The conditions and warranties. These impose duties on you — maintenance, security, notification timelines, keeping records. Breaching one can cost you a claim.
- The endorsements. These change the printed wording and override it. Read every one, because this is where a landlord's notation, a contractual liability extension or a restrictive condition will sit.
If something is unclear, ask for the answer in writing before you need it. A written confirmation from your insurer or intermediary at inception is worth considerably more than a verbal reassurance recalled after a loss. This site explains how cover works and refers enquiries to licensed professionals; it does not place cover or interpret specific policy wordings.
Frequently asked questions
What does business insurance not cover?
Business insurance generally does not cover wear and tear or gradual deterioration, deliberate or fraudulent acts, circumstances you knew about before buying the policy, damage at premises left unoccupied beyond a stated period, liability you assumed by contract beyond common law, cyber and data losses under a property policy, and war, terrorism and nuclear risks. It also does not cover what belongs on another policy — employee injuries sit on WICA cover, and bad advice sits on professional indemnity.
Why was my business insurance claim rejected?
Most declined commercial claims turn on one of four things: an exclusion applies, a policy condition was breached, the loss was gradual rather than sudden, or the activity was outside the business description on the schedule. Ask the insurer to identify the specific clause it is relying on, in writing — that is the starting point for challenging a decision or escalating it.
Does business insurance cover wear and tear?
No. Wear and tear, corrosion, gradual deterioration and mechanical breakdown from age are excluded across essentially all commercial policies, because insurance responds to sudden and accidental events rather than to maintenance. A gradual leak that has been damaging a ceiling for months is generally treated as a maintenance issue, not an insured loss.
Does my property policy cover a cyber attack?
Generally no — conventional property, fire and business interruption wordings typically exclude cyber events and loss of data, so ransomware that halts your operations will not respond as a property claim. Cyber-related losses need a separate cyber policy, which usually covers incident response, data restoration, business interruption from a cyber event and third-party claims.
What is a contractual liability exclusion?
A contractual liability exclusion removes cover for liability you assumed by agreement that goes beyond what the law would have imposed on you anyway. It matters most in leases and subcontracts with broad indemnity clauses: the portion of the indemnity that exceeds your common-law liability is typically uninsured unless the insurer has specifically endorsed the wording, so ask before you sign.
Am I covered if my premises are empty for a few months?
Often not on the usual terms. Most property policies restrict or exclude cover once premises are unoccupied for more than a stated number of consecutive days, and the restriction commonly applies to theft, malicious damage and water damage. Tell your insurer before the premises go quiet — unoccupancy can usually be accommodated by endorsement, but only in advance.
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