What types of losses are typically excluded from virtually all property policies?

Property policies often contain exclusions for certain types of losses that are considered too high risk or that policyholders can financially mitigate through other means. Earthquake and flood damage are classic examples of these exclusions.

These natural disasters are typically not covered by standard homeowners or property insurance because they can cause extensive damage that could lead to tremendous liability for insurance companies. Instead, policies for earthquake and flood insurance are usually purchased separately, reflecting the significant financial risk associated with these types of events.

Conversely, losses due to fire and theft damage, vandalism, and accidental damage may be included in property policies, as these are more commonly covered risks. Wear and tear is generally considered a part of maintenance responsibility and not an insurable loss, but it reflects the policy's intent to cover damage caused by external, rather than internal, factors. Hence, the exclusion of earthquake and flood damage aligns with how insurance policies are structured to manage risk effectively.