What is an insurance exhaustion clause?

An insurance exhaustion clause is a clause included in insurance contracts that states that an insurance company is not liable for damages that exceed the amount of the policyholder’s coverage. It is especially important in insurance litigation cases in Texas because it can protect insurance companies from paying out more than what is required on the policy. Insurance exhaustion clauses are used to make sure that policyholders do not receive more money than they are covered for. The clause is important because it prevents a policyholder from receiving more than the amount of the policy without additional payment. In Texas, insurance companies will often include an insurance exhaustion clause in the policy to prevent this from occurring. Under Texas law, insurance exhaustion clauses must be written in plain language and in the same language as the insurance contract so that a policyholder can understand exactly what they are signing. Insurance exhaustion clauses are also subject to certain rules and regulations, such as certain restrictions on which types of damages are covered and how much money may be received by the policyholder. In summary, an insurance exhaustion clause is a clause in an insurance contract that mandates that an insurance company is not liable for damages that exceed what is covered under the policy. The clause is important to policyholders in Texas because it prevents them from receiving more money than the amount of the policy without additional payment.

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What is an insurance exhaustion clause?

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