Simple English definitions for legal terms
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An other-insurance clause is a part of an insurance policy that says if the person being insured has coverage from another insurance policy for the same loss, the coverage from the first policy will be limited. There are three types of other-insurance clauses: pro rata, excess, and escape.
An other-insurance clause is a provision in an insurance policy that limits coverage if the insured has other coverage for the same loss. There are three major types of other-insurance clauses:
For example, let's say you have two car insurance policies, each with a $10,000 limit for collision coverage. If you get into an accident and the damage to your car is $15,000, the pro rata clause would require each insurance company to pay $7,500 (half of the total loss) since you have equal coverage with both policies. The excess clause would require one policy to pay the full $10,000 before the other policy pays anything. The escape clause would mean that neither policy would pay anything since you have other insurance covering the same loss.
These clauses are important to understand because they can affect how much coverage you have and how much you will be reimbursed in the event of a loss.