You choose one firm choice and one insurance choice.
The insurance should have lower entry requirements than the firm choice (otherwise there's bugger all point in having it), but it should still be a uni that she would be happy to go to if she missed her firm choice.
If she missed the grades for her firm choice, then they may choose to take her, but they may not - it's their decision. However, this doesn't involve going through Clearing - the decision's usually made a few days before results are released to students.
If she misses the grades for her firm choice but gets the grades at her insurance choice, she has a place at her insurance. She could ask to be released into Clearing, but this can be a long-winded faff.
If she misses the grades for both her firm and insurance, and neither decide to take her anyway, then she will be in Clearing.
If she gets the grades for her firm choice, then she cannot decide on results day to change to her insurance choice - the offer evaporates (at that point, the options are going to her firm or going through Clearing).