In a situation with two insurance policies covering the same property, what method is described by "the pro-rata share method" for claims?

The pro-rata share method refers to a system where multiple insurance policies covering the same property divide the responsibility of a claim based on the proportion of coverage each policy offers. This means that insurers pay claims relative to the amount of coverage they each provide.

In this scenario, if one policy has a higher coverage limit than another, it will pay a larger portion of the claim than a policy with a lower limit. This ensures that the total payout aligns with the amount of risk each insurer has accepted. Thus, if a claim arises, the total amount covered by each insurer reflects their respective share, promoting fairness and preventing an insurer from bearing an undue burden when multiple policies are in play.

This method is particularly advantageous because it allows for a coordinated response between insurers while preventing duplication of coverage, which can lead to disputes about payment responsibilities.