Under a 'contribution by equal shares' other-insurance method, how do two policies generally share a loss?
a.Each policy pays equal amounts of the loss until one policy's limit is exhausted, after which the other policy continues to pay alone up to its limit
b.Only the policy with the higher limit pays anything, and the lower-limit policy contributes nothing toward the loss no matter how large the loss eventually turns out to be or how long it takes to settle
c.Strictly by which policy was issued first, so the earlier-dated policy pays the entire loss up to its limit before the later policy is asked to contribute anything at all toward the claim
d.In proportion to their stated premiums, so the policy charging the larger premium pays the larger share
Explanation
Under contribution by equal shares, each policy pays an equal dollar share of the loss until the lower-limit policy is exhausted; the policy with the higher limit then continues to pay alone up to its remaining limit. This method is common in commercial liability; pro rata by limit is the common method in property insurance.
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