What does the term "Other Insurance Clause" refer to in property insurance?

The term "Other Insurance Clause" refers to the circumstances where two or more insurers share the liability for the same claim. This clause is important in understanding how coverage works when there are multiple policies that could respond to a loss. In cases where a policyholder has multiple insurance policies that cover the same risk or loss, the Other Insurance Clause dictates how the insurers will coordinate their coverage.

This clause typically establishes how much each insurance company will pay—whether they will contribute equally, in proportion to the coverage limits, or one policy will act as the primary and the other as excess coverage. This prevents the insured from profiting from a loss, as they cannot receive more in total compensation than the value of the loss incurred.

The other options highlight different aspects of insurance but do not accurately define the Other Insurance Clause. For instance, options mentioning claims being paid under multiple coverages or restrictions in coverage scenarios don’t capture the essence of how different insurance policies interact with one another in situations where a loss is covered by more than one policy. The idea of non-payment for undisclosed information relates to policy terms but does not pertain to the mechanism by which multiple insurers handle claims arising from the same incident.