Types of Other Insurance Clauses
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There are three basic types of other insurance clauses. They can be broadly identified as pro rata clauses, excess clauses, or escape clauses.
Pro rata clauses usually provide that if other insurance exists, the insurer will pay its pro rata share of the loss.
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 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.