In the event of loss, how is the liability determined among multiple insurers for the same property?

The correct answer focuses on the method of determining liability among multiple insurers when a loss occurs for the same property. Ratable Proportion applies when more than one insurer provides coverage for the same property; the insurers will pay claims based on their respective shares of the total coverage.

For instance, if an individual has two policies covering the same risk—one for $100,000 and another for $200,000—and the loss incurred is $30,000, each insurer would contribute to the payment in proportion to their liability. Therefore, the insurer covering $100,000 would pay one-third of the claim, while the insurer covering the $200,000 would pay two-thirds of the claim. This method ensures fairness and prevents an insured individual from receiving more than the actual loss due to the existence of multiple policies.

In contrast, other methods listed do not effectively divide liabilities in a proportional manner, as they either do not take policy limits into account or suggest an arbitrary method of distribution that could lead to imbalances in claim payouts.