A Video Explaining “Other Insurance” Clauses in Liability Insurance Policies Unlisted Video

A Video Explaining “Other Insurance” Clauses in Liability Insurance PoliciesShow more

There are three basic types of other insurance clauses. They can be broadly identified as pro rata clauses, excess clauses, or escape clauses.

Porata Clauses

Pro rata clauses usually provide that if other insurance exists, the insurer will pay its pro rata share of the loss. Payment is usually made in the proportion that its policy limit bears to the aggregate limit of all other valid and collectible insurance.

Excess Clauses

Excess clauses usually provide that an insurer’s liability is limited to the amount by which the loss exceeds the coverage provided by all other valid and collectible insurance, up to the limits of the policy containing the excess clause.

Escape Clauses

Escape clauses attempt to avoid all liability for a loss covered by other valid and collectible insurance. A true escape clause, sometimes referred to as a “super escape clause,” extinguishes all coverage in the event of other insurance. It is often difficult to enforce because it avoids liability entirely. Many courts, as a result, are loathe to allow an insurer to collect a premium and totally avoid paying a loss because of the insertion of an escape clause in their policy.

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

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