Which clause limits multiple recovery by sharing risk across policies?

Which clause limits multiple recovery by sharing risk across policies?

• A. Deductibles
• B. Coinsurance
• C. Subrogation
• D. Other insurance provisions

Answer: (D)

When more than one policy covers the same loss, the key idea is to prevent the insured from recovering more than the actual loss by coordinating payments among the insurers. The other insurance provisions spell out how the loss is shared between policies, often on a pro rata basis based on policy limits or through primary and excess arrangements. This ensures that total payments across all policies don’t exceed the amount of the loss, effectively limiting multiple recoveries. Deductibles determine how much the insured pays before any insurer contributes, and coinsurance fixes how much an insurer pays relative to value, but neither governs cross-policy coordination. Subrogation later lets the insurer recover from a third party after paying a claim, not how multiple insurers divide a single loss.

When more than one policy covers the same loss, the key idea is to prevent the insured from recovering more than the actual loss by coordinating payments among the insurers. The other insurance provisions spell out how the loss is shared between policies, often on a pro rata basis based on policy limits or through primary and excess arrangements. This ensures that total payments across all policies don’t exceed the amount of the loss, effectively limiting multiple recoveries. Deductibles determine how much the insured pays before any insurer contributes, and coinsurance fixes how much an insurer pays relative to value, but neither governs cross-policy coordination. Subrogation later lets the insurer recover from a third party after paying a claim, not how multiple insurers divide a single loss.