Why might some losses be categorized as excluded perils in an insurance policy?

Some losses are categorized as excluded perils in an insurance policy primarily because they may be foreseeable or controllable events. Insurers often exclude certain perils to mitigate risk and discourage behavior that could lead to predictable losses. For example, if a potential loss is something that policyholders could easily prevent or foresee, providing coverage for it would lead to higher claims and, consequently, higher premiums.

By excluding such risks, insurers can maintain a more stable risk pool and focus on covering losses that are less predictable and often beyond the control of the insured. This strategic decision facilitates insurance companies in managing their liability and ensuring the financial viability of their policies.