What is a common exclusion in Dwelling Policies?

In dwelling policies, flood and earthquake damage are commonly excluded because these types of natural disasters can result in extensive damage that is often catastrophic. Insurers typically do not include coverage for these risks as they are difficult to predict and can lead to significant financial losses for the insurer. Instead, policyholders usually need to obtain separate coverage specifically designed for flood or earthquake risks, reflecting the specialized nature of these perils and the unique exposures they present.

Fire damage, theft, and vandalism are generally covered under most dwelling policies, although there may be specific limitations or conditions applied to them. For example, while theft is usually included, there could be stipulations regarding the circumstances under which it is covered. Overall, the exclusion of flood and earthquake damage underscores the insurance industry's approach to managing high-risk events through specialized products.