When can an insurer deny a claim based on a policy exclusion?

An insurer can deny a claim based on a policy exclusion when either the direct or remote cause of the loss falls under the exclusions specified in the policy. Policy exclusions are particular circumstances or events that are not covered by the insurance policy, and these are essential to understanding the scope of coverage provided.

In cases where the loss results from factors that are explicitly excluded, it is valid for the insurer to refuse payment of the claim. This principle emphasizes the importance of carefully reviewing both the causes of a loss and the language of the policy exclusions.

The other options, while related to causes and circumstances of loss, do not accurately encompass the situations under which a claim can be denied based on an exclusion. For example, having a primary cause that is covered does not negate the effect of an excluded secondary or remote cause, which can be sufficient grounds for denial. Similarly, while losses that occur outside of the coverage territory can result in denial, it does not involve the nuances of cause and exclusion specifically. Lastly, a loss caused by negligence might still be covered unless specifically excluded; thus, negligence alone is not inherently a reason for denial based on exclusions.