5 An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay?

Question

Seamus Valentine

Business

24 April, 05:26

5 An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay?

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Answers (1)

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Maritza Mcdowell · Answer 1

each policy will pay $25,000 of the loss

Explanation:

Based on the scenario being described within the question it can be said that the each policy will pay $25,000 of the loss. This is an equal share for each policy and is due to them having the pro rata liability clause. This clause states that a policy is only liable for an equal percentage of the loss if the insurer has other policies from other companies. As in this case.