1. Insurance Terms & Definitions/
  2. Insurance Terms Starting With O

Other Insurance Clause

What is an Other Insurance Clause?

An “other insurance clause” is a provision in an insurance policy that addresses how coverage will apply if the insured party has multiple insurance policies covering the same type of loss. Both liability and property insurance policies often include this clause. The purpose of an “other insurance clause” is to prevent the policyholder from collecting more than the actual cost of the loss. The clause lets insurers share the cost of the loss proportionally based on their respective policy limits. This clause is intended to promote fairness and prevent over-insurance, which can create a moral hazard and increase the risk of fraud.