What part of an insurance policy serves to remove or restrict coverage?

The correct answer is exclusion. Exclusions in an insurance policy specifically define what is not covered under the policy. They serve to limit the insurer's liability by outlining certain risks, losses, or situations that are deliberately omitted from coverage. For example, many policies may exclude coverage for certain types of damage, such as wear and tear, or specific circumstances like acts of war or natural disasters.

Understanding exclusions is significant for both insurers and policyholders, as it clarifies the scope of coverage and sets boundaries on the insurer's financial responsibility. This means that in the event of a claim, if the situation falls under an exclusion, the insurer is not obligated to pay for those particular losses.

In contrast, endorsements and riders typically modify a policy to add or alter coverage rather than remove it. An endorsement, which is an amendment to the policy, may provide additional coverage or modify terms, while a rider is generally an addition to an insurance policy that expands or restricts the benefits payable. Inclusion would generally refer to coverage aspects rather than restrictions, further reinforcing why exclusion is the term that accurately fits the description of removing or restricting coverage.