What is an insurance exhaustion clause?
An insurance exhaustion clause is a provision of an insurance policy that describes how a policyholder can receive a settlement from their insurance company. An insurance exhaustion clause typically requires the policyholder to exhaust all coverage under the policy before they can receive a settlement. This means that the policyholder must use their own resources to pay any remaining costs and cannot make a claim against the insurance company unless they have no other coverage sources. In California, insurance exhaustion clauses are valid and enforceable by law. The California Insurance Code outlines the necessary requirements for a valid and enforceable insurance exhaustion clause, including the language of the clause and the conditions under which an exhaustion clause can be invoked. In a nutshell, an insurance exhaustion clause is a contract clause that dictates how an insurance policyholder can receive a settlement from their insurance company. In California, insurance exhaustion clauses are enforceable by law and must include certain requirements such as language and conditions for when the clause can be invoked. Insurance exhaustion clauses help policyholders ensure they are protected and receive the necessary coverage from their insurance company.
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