When other insurance is written on the same basis as a Commercial Property policy, what is the insurer obligated to cover?

• A. A share of the loss
• B. The entire loss
• C. The deductible only
• D. Nothing

Answer: (A)

When other insurance is written on the same basis as a Commercial Property policy, the loss is shared among the insurers in proportion to each policy’s limit. This pro rata approach means each insurer covers a portion of the loss equal to its policy limit divided by the total limits in force, up to the loss amount. For example, if two policies each have a $100,000 limit and the total loss is $150,000, each policy would pay $75,000 (subject to deductibles and terms). The insurer is not responsible for the entire loss, and it isn’t limited to just the deductible or nothing at all; it pays its proportional share.