Texas Property and Casualty License Practice Exam

What does the Other Insurance Clause in a personal auto policy state?

1. Coverage is void if another insurance exists

2. All vehicles are covered under the same policy

3. Insurance provided for a non-owned vehicle is excess to other insurance

4. Insurance is not applicable for vehicles rented by the insured

The correct answer is: Insurance provided for a non-owned vehicle is excess to other insurance

The Other Insurance Clause in a personal auto policy specifically states that when covering a non-owned vehicle, the insurance provided is considered excess to any other insurance that may apply. This means that if the insured has another policy that offers coverage for the same vehicle, the personal auto policy will only come into play after the limits of the other insurance have been exhausted. This clause is designed to prevent overlapping coverage and ensure that the insured is not over-compensated in the event of a claim. This principle helps to clarify how claims are handled when multiple insurance policies might apply, ensuring that the primary insurance takes the initial responsibility for a claim. Therefore, the policy covers additional costs only after any other applicable insurance has been used up, providing a systematic approach to resolving claims involving multiple insurers.