Policyholders, Do Not Accept a Coverage Denial Based on "Other Insurance"

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Problems can arise for policyholders when an insurance company incorrectly asserts that the “other insurance” clause in its policy permits it to delay in paying or refuse to pay a claim.

Many insurance claims, particularly commercial insurance claims, can implicate coverage under more than one insurance policy. Insurance companies insert “other insurance” clauses in first-party and third-party liability policies to stipulate how loss is to be apportioned among insurance companies when more than one policy covers the same loss. Problems can arise for policyholders when an insurance company incorrectly asserts that the “other insurance” clause in its policy permits it to delay in paying or refuse to pay a claim. Such a position directly contradicts the well-settled rule that “other insurance” clauses should only affect rights among insurance companies and do not affect the policyholder’s access to coverage under an insurance policy.