What triggers pro-rata payment under the 'insurance with other insurers' provision?

• A. Notification before claim that there is other coverage
• B. No notification before claim that there is other coverage
• C. The claim exceeds policy limits
• D. The insured is unemployed

Answer: (B)

The idea being tested is how multiple policies share a loss when more than one insurer could pay. When there is other insurance covering the same loss, benefits are coordinated so you don’t get paid more than the actual loss. Pro-rata sharing automatically divides the payment among all applicable policies based on their coverage limits, preventing double recovery.

In this scenario, pro-rata payment is triggered when there is other coverage and the insured does not notify the insurer about that other coverage before filing the claim. The insurer uses the pro-rata method to determine its share of the loss relative to total coverage, since it was not informed that another policy also covers the claim. The other choices don’t fit because they don’t address the need to account for existing other insurance before benefits are paid, and the remaining options (claim amount beyond limits or the insured’s employment status) aren’t about coordination of benefits.