If two or more insurers share losses equally until each share equals the lowest limit or the loss is paid, this method is called?

If two or more insurers share losses equally until each share equals the lowest limit or the loss is paid, this method is called?

• A. Contribution by Equal Shares
• B. Pro Rata Liability
• C. Aggregate
• D. Per Occurrence

Answer: (A)

When multiple insurers cover the same loss, this question focuses on how they divide the cost when the share is meant to be equal. In the equal shares approach, each insurer pays the same portion of the loss. They continue contributing equal amounts until the amount for an insurer would reach its policy limit, starting with the lowest limit; if the loss still isn’t paid after that, the remaining insurers pick up the balance in equal portions, again up to their own limits. This method distributes the burden evenly rather than by how large each policy is. The other methods don’t describe this equal-sharing process: pro rata liability allocates by proportion to policy limits, aggregate refers to a single limit for all losses in a policy period, and per occurrence sets a limit for each individual incident.

When multiple insurers cover the same loss, this question focuses on how they divide the cost when the share is meant to be equal. In the equal shares approach, each insurer pays the same portion of the loss. They continue contributing equal amounts until the amount for an insurer would reach its policy limit, starting with the lowest limit; if the loss still isn’t paid after that, the remaining insurers pick up the balance in equal portions, again up to their own limits. This method distributes the burden evenly rather than by how large each policy is. The other methods don’t describe this equal-sharing process: pro rata liability allocates by proportion to policy limits, aggregate refers to a single limit for all losses in a policy period, and per occurrence sets a limit for each individual incident.