Multiple Policies

Question 0

Excess policy

Answer 0

Pays after primary limits are exhausted

Question 1

Primary policy

Answer 1

Pays first up to the lesser of its limit or amount of loss

Question 2

Pro rata

Answer 2

Insurers charge cost of claim

Insurer A: 1/4 of policy limit
Insurer B: 3/4 of policy limit

(Most common method)

Question 3

Nonconcurrency

Answer 3

Two policies without identical coverages

Loss percentage is shared, but one will pay for loss as a covered peril; other will not due to an exclusion

Question 4

Coinsurance condition

Answer 4

• Partial losses more common than total losses
• Risk of under insurance
• encourages insured to carry insurance limits as close to full value of property as possible