Under equal shares contribution, with Policy A providing $100,000 and Policy B providing $50,000, how much would each policy pay for a $75,000 loss?

Under equal shares contribution, with Policy A providing $100,000 and Policy B providing $50,000, how much would each policy pay for a $75,000 loss?

• A. Policy A $37,500; Policy B $37,500
• B. Policy A $50,000; Policy B $25,000
• C. Policy A $75,000; Policy B $0
• D. Policy A $0; Policy B $75,000

Answer: (A)

Equal shares contribution means each policy pays the same portion of a loss, up to its limit. With a 75,000 loss and two policies, the loss is split evenly: 75,000 ÷ 2 = 37,500 from each. Both policies have enough limit to cover their share (Policy A has 100,000, Policy B has 50,000). So each pays 37,500. The other options propose unequal shares or large portions paid by only one policy, which isn’t consistent with equal shares.

Equal shares contribution means each policy pays the same portion of a loss, up to its limit. With a 75,000 loss and two policies, the loss is split evenly: 75,000 ÷ 2 = 37,500 from each. Both policies have enough limit to cover their share (Policy A has 100,000, Policy B has 50,000). So each pays 37,500. The other options propose unequal shares or large portions paid by only one policy, which isn’t consistent with equal shares.