General Lines Property and Casualty Insurance Practice Exam

In the scenario presented, the Pro Rata Liability Solution applies to apportion the loss among the insurers based on their respective policy limits. The total policy limits amount to $100,000, and the total loss is $40,000.

To calculate how much each insurer pays, you would determine the pro rata share for each insurer according to their coverage limits as a proportion of the total policy limits. However, since the specific coverage limits for each insurer are not provided, we'll assume that Insurer A has a coverage limit that allows them to pay a share of the loss proportionally.

If Insurer A's limit is, for instance, $25,000, then their share of the total limit of $100,000 would be:

- Pro Rata Share = (Insurer A’s Limit / Total Policy Limits) * Total Loss

- Pro Rata Share = ($25,000 / $100,000) * $40,000

- Pro Rata Share = 0.25 * $40,000 = $10,000

Thus, based on this calculation, Insurer A would indeed pay $10,000 towards the loss. This method ensures that each insurer contributes to the loss in relation to the amount of