Three-Fourths Loss Clause

Definition - What does Three-Fourths Loss Clause mean?

The three-fourths loss clause was a provision in property insurance that stated that an insurance company was not liable to pay more than 75 percent, or three-fourths, of the loss or damage. For example, if you made a claim for $100 worth of property damage covered by your insurance policy, the company would not be required to pay more than $75.

It is no longer in use today but was historically common in property and marine insurance policies.

Insuranceopedia explains Three-Fourths Loss Clause

Insurance companies used the three-fourths loss clause as a way to encourage policyholders to be more careful with their property and discourage excessive claims. The idea was that because policyholders would have to pay a significant amount out-of-pocket for every claim, they would take more precautions to avoid using their insurance. In exchange, the insurance companies would issue policies with this clause at a lower price. Today, you can set up your policy with a higher deductible to get the same effect: a lower price in exchange for less coverage.

This definition was written in the context of insurance

Connect with us

Insuranceopedia on Linkedin
Insuranceopedia on Linkedin
"Insuranceopedia" on Twitter

Sign up for Insuranceopedia's Free Newsletter!