Other Insurance Clause
A policy provision that determines how coverage applies when more than one policy covers the same loss.
What It Is
The other insurance clause is a standard policy provision that addresses how coverage is allocated when two or more insurance policies potentially cover the same loss. Because commercial insureds often have multiple policies that could respond to a single event (such as a CGL policy and an umbrella, or two CGL policies from different periods), other insurance clauses establish the priority and method of contribution between policies.
There are three primary types of other insurance provisions. Pro-rata contribution requires each policy to pay a proportionate share based on their respective limits. Excess other insurance makes the policy excess over any other valid and collectible insurance, meaning it only pays after the other policy is exhausted. Primary other insurance makes the policy pay first, with other insurance acting as excess. Escape clauses attempt to eliminate coverage entirely when other insurance exists, though courts have largely invalidated these.
When two policies with conflicting other insurance clauses cover the same loss (such as both claiming to be excess), courts typically override the clauses and apply equitable contribution, usually pro-rata by limits or equal shares until the lower limit is exhausted.
Why It Matters for Brokers
Other insurance clauses directly affect how claims are paid across a client's insurance program. Brokers must understand these provisions to properly coordinate coverage, set realistic expectations about how large claims will be funded, and avoid placing policies with conflicting provisions that create confusion and delay at claim time.
Real-World Example
A tenant causes a fire damaging both its own business personal property and the landlord's building. The tenant's BPP is covered by its own property policy ($500K limit). The landlord's building damage triggers both the landlord's property policy ($2M limit) and the tenant's CGL policy ($1M limit). The landlord's property policy has an other insurance clause making it primary. The tenant's CGL pays the landlord's $350,000 building damage claim. The tenant's property policy pays its own $120,000 BPP loss. The landlord's property carrier subroates against the tenant's CGL carrier for the building loss unless waiver of subrogation applies.
Common Mistakes
- 1Not reviewing other insurance clauses across all policies in a program to identify conflicts that will cause disputes at claim time.
- 2Assuming the umbrella always pays after the primary when some claims scenarios can trigger other insurance clauses that alter the expected layering.
How brokerageaudit.com Handles This
brokerageaudit.com's Policy Checker identifies and compares other insurance clauses across all policies in a client's program, flagging conflicts where multiple policies claim to be excess or where contribution methods differ. The system generates a coverage coordination map showing the expected priority of coverage for common claim scenarios.