Other Insurance Clause
What Does Other Insurance Clause Mean?
An other insurance clause is a provision included in insurance policy contracts that specifies exactly how much coverage the policy offers if the insured has another policy that covers the same risk. Depending on the clause, the insurers may share coverage or one policy may be sufficient.
Insuranceopedia Explains Other Insurance Clause
The other insurance clause is a protection against overinsurance, a situation in which multiple insurers pay out claims for the same loss. Overinsurance would allow an insured to earn a profit from their insurance policies.
Usually, one policy is assigned as the primary insurance. The primary insurance is the first coverage that will come into effect when the policyholder suffers an insured loss. If the primary policy is exhausted and has not been able to pay for the entire loss, the other policies will provide additional coverage for the remaining loss.
Policyholders are advised to read the other insurance clause carefully because it might notify them that the policy will not provide coverage if another policy covers the same risk.