Question

Which of the following statements best describes the Other Insurance condition on a standard property insurance policy, when two separate property policies provide coverage for the same loss?

a. Neither policy will make payment for the loss

b. Each policy pays an equal share

c. One policy pays up to its limits and the other policy pays the balance

d. Each policy pays its pro rata share of the loss

Answer 1

The Other Insurance condition generally requires each property policy to pay its pro rata share of a covered loss when multiple policies are involved.

Step-by-step explanation:

When two separate property policies provide coverage for the same loss, the Other Insurance condition in a standard property insurance policy typically requires that each policy pays its pro rata share of the loss.

Pro rata is a method of allocating the insurance payment based on the proportion each policy contributes to the total coverage amount.

This condition prevents the policyholder from receiving more than 100% of the covered loss and helps to spread the risk between multiple insurers.

It's important to note that this arrangement can vary depending on the wording of the specific policies.