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Simple English definitions for legal terms
American clause
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A quick definition of American clause:
An American clause is a rule in marine insurance that says if you buy a new insurance policy after an incident has happened, your first insurance company can't ask the new company to help pay for the damages. It's like saying "you can't change your mind and ask for more help later."
A more thorough explanation:
Definition: An American clause is a provision in a marine insurance policy that prevents the insurer from claiming contribution from a policy that the insured purchases later.
Example: Let's say a shipping company purchases a marine insurance policy that includes an American clause. Later on, the company decides to purchase an additional policy from a different insurer. If the shipping company experiences a loss, the first insurer cannot claim contribution from the second insurer due to the American clause.
Explanation: The American clause is designed to protect the insured from having to pay multiple claims for the same loss. In the example, the shipping company purchased two policies to ensure they were adequately covered. The American clause prevents the first insurer from claiming contribution from the second insurer, which means the shipping company will only have to pay one claim for the loss.