Question

An insured has auto insurance with both Company A and Company B; how much will Company B have to pay for a covered loss of $3,000 if Company A's Limit of Liability is $100,000 and Company B's is $200,000?

A $1,000
B $3,000
C $500
D $2,000

Answer 1

Company B will have to pay $1,000 for the covered loss of $3,000 if Company A's Limit of Liability is $100,000 and Company B's is $200,000.

Step-by-step explanation:

When an insured has auto insurance with multiple insurance companies, the companies may share the liability for covered losses based on their respective limits. In this case, Company B will have to pay for the covered loss of $3,000 after Company A's Limit of Liability is exhausted. Company A's limit is $100,000, so it will pay for losses up to that amount, and the remaining amount will be the responsibility of Company B. Since Company B's limit is $200,000, it will cover the remaining $3,000. Therefore, the answer is option A: $1,000.