An automobile insurance policy may have a provision for “other insurance.” When more than one insurance policy provides coverage for a loss, the “other insurance” clause can limit an insurance company’s liability by defining the priority in which the policy should pay an insured’s claim. There are three types of “other insurance” clauses: (1) pro rata; (2) excess; and (3) escape.
Insurance companies do not defend their insureds in criminal proceedings based on automobile collisions. However, nearly all automobile collisions result from infractions of traffic regulations. The fact that an insured was violating a law at the time a covered accident occurred does not relieve an insurance company’s duty to defend that insured in a civil action or its duty to pay for the injuries or damages caused by the insured.
An automobile insurance policy can contain a clause that requires an insured to obtain the consent of the insurance company before settling a lawsuit with an uninsured motorist. Some states require the consent-to-settle clause by statute. In the absence of a statutory requirement, many courts have upheld consent-to-settle clauses. Those states that do not enforce such clauses often cite public policy. They fear that an insurance company will be able to avoid paying its share of uninsured motorist coverage by failing to consent to a settlement. Other courts find that such clauses can reduce settlements by creating another step for the insured take.
Motor vehicles are valuable items of personal property that can be readily moved from one place to another if they come into the possession of persons other than their rightful owners or operators. They are highly useful in an intact condition, and they can also be disassembled in order to obtain and sell their component parts. As a result, thefts of cars and trucks occur in large numbers in the United States. Theft coverage in auto insurance policies has been devised as a means of protecting the owners and operators of motor vehicles from the economic losses caused by auto theft.
Underinsured motorist and uninsured motorist provisions in auto insurance policies often contain language stating that the underinsured or uninsured motorist coverage will not become available until the policy limits of all insurance policies that are applicable to the accident have been exhausted by the payment of judgments or settlements. Such exhaustion requirements are included in the policy because of the substitute or supplemental nature of the coverage and the understandable desire of the insurer to assure that all other available coverage has been applied before it is obligated to pay benefits under the underinsured or uninsured motorist provisions of the policy.