Rhode Island Insurance Adjuster Exam

What does the term "other insurance" refer to?

1. A policy covering different types of losses

2. Provisions applying when more than one policy covers the same loss

3. Insurance against natural disasters

4. Coverage for uninsured individuals

The correct answer is: Provisions applying when more than one policy covers the same loss

The term "other insurance" refers to provisions that are activated when more than one insurance policy provides coverage for the same loss. This concept is critical in determining how claims are settled when multiple policies may apply. These provisions help insurance companies avoid paying out more than the actual loss by coordinating the role of each policy in the reimbursement process. For instance, if a property is insured by two different policies and a loss occurs, the "other insurance" clause will determine which insurer is responsible for the primary payout and how the secondary insurer will contribute, ensuring that the insured does not receive a windfall from overlapping coverages. In contrast, coverage for different types of losses, insurance against natural disasters, or protection for uninsured individuals do not specifically address how overlapping policies function in terms of claims, which is why those options do not accurately define the term "other insurance." Understanding this term is crucial for insurance adjusters as it directly affects claims handling and settlement outcomes.