Which clause requires insurance coverage to be allocated in proportion to the total insurance in force?

The apportionment clause is a critical component in insurance contracts that specifically addresses how losses will be allocated among multiple policies when there is more than one insurance policy covering the same risk. This clause ensures that when a claim occurs, the compensation awarded is divided proportionally according to the total amounts insured across all policies in force.

For instance, if two policies cover the same property, and one has a limit of $200,000 while the other has a limit of $300,000, the total insurance in force becomes $500,000. If there is a loss of $100,000, the apportionment clause would guide that the claim be paid in proportion to the limits of the two policies, ensuring the insurers pay according to their respective shares of the total coverage.

In contrast, exclusions refer to specific situations or items that are not covered by the insurance policy, which does not relate to the allocation of coverage. Demolition insurance covers the costs associated with demolishing property, which is not relevant to the allocation of coverage. Subrogation refers to the right of an insurer to pursue a third party that caused a loss to the insured, aiming to recover the amount paid out in a claim, which also does not pertain to the