Often, the simpler and clearer the insurance coverage, the better it works. Finding the right policy, at the right price and for the proper amount of protection is the goal. However, sometimes circumstances necessitate a zig instead of a zag. In this case, the complicating factor was the applicability of more than one policy.

A poultry farmer had coverage under two policies when a loss occurred. A fire broke out that damaged two of the policyholder's poultry houses. He filed a claim with both his insurers and a problem arose because of policy wording. One insurer denied its policy's protection alleging that, what was essentially an "Other Insurance" clause, barred coverage. The remaining insurer sued.

Click here for details on how a court ruled on a situation that it labeled to be mutually repugnant.

The issue mentioned above illustrates how policy wording and the coverage intent of insurers have, historically, been dynamic. Insurance is meant to get a person who suffers a loss back to the financial position they enjoyed before the loss happened. Therefore, insurance companies have a powerful interest in eliminating situations where a person is paid more than the actual amount of a given a loss.

Excessive payments are possible due to the existence of different policies and/or different provisions within a single policy which could cover a given loss. While the court case we featured made reference to "escape clauses," policies usually title such provisions "Other Insurance," to deal with duplicate protection.

Click here to see a discussion of the Other Insurance provision that is one of hundreds of topics from E-Marketing For Agencies found in Advantage Plus.

Other Insurance provisions discuss how a policy responds to an eligible loss to which other sources of coverage exist. There may be other titles used but the approaches tend to work to control how coverage applies so that the policyholder receives fair reimbursement. Some policies are narrower, only taking into consideration other existing insurance policies. Others are broader, taking into consideration any and all available coverage sources. They would adjust coverage for additional protection such as contractual arrangements, warranties, or protection plans. Other insurance provisions may do one or more of the following:

• Permit another source of coverage to pay on a primary basis, holding off on coverage until the other source is exhausted.
• Participating in coverage in equal shares - each coverage source pays an equal amount of the loss
• Participating in coverage on a pro-rata basis - each coverage source pays according to the proportion of protection it bears in relation to the total available protection.

Click here for an excerpt from AAIS Farmowners Program: FOwww.yout-20-Additional Policy Conditions And Property Coverage Terms from PF&M Analysis found in Advantage Plus.

It may be that an insurance professional's clients may never run into duplicate coverage situations. However, should they arise, they have the potential to be a serious problem. How policy wording explains its applicable provision has an influence. If the information is simple and clear, it's more likely to be readily understood by a client. When language is difficult, it's important that explanations are made in a manner that assures a client that a loss is properly addressed.

It is quite important to be familiar with such provisions. If a client seeks help from their insurance professional, advice must be given confidently. Duplicate coverage scenarios, if handled poorly, may create unrealistic expectations. Few situations result in disgruntled policyholders quicker than receiving payments that are perceived to be insufficient.

Click here to see excerpts from an article that discusses what excellent agencies do when dealing with their clients. It comes from the archives of Rough Notes Magazine found in Advantage Plus.