Question

What problem is a Pro Rata Liability Clause included in an insurance policy designed to address?

Option 1: Determining the policy premium amount.
Option 2: Managing claims for multiple insured parties.
Option 3: Calculating the coverage limits for a single claim.
Option 4: Handling policy cancellations and renewals.

Answer 1

A Pro Rata Liability Clause is included in an insurance policy to address the problem of managing claims for multiple insured parties.

Step-by-step explanation:

A Pro Rata Liability Clause is included in an insurance policy to address the problem of managing claims for multiple insured parties. This clause ensures that each party is responsible for their proportionate share of a claim based on their level of coverage. For example, if there are three insured parties and a claim is filed, each party would be responsible for covering one-third of the claim amount.