MrThickRopes
23:16
Warning
Info
Warning
Info
LSDefine
Simple English definitions for legal terms
apportionment clause
Read a random definition: Rev. Stat.
A quick definition of apportionment clause:
An apportionment clause is a part of an insurance policy that decides how the insurance money will be divided among the people or things that are covered. It makes sure that everyone gets a fair share based on how much coverage they have.
A more thorough explanation:
An apportionment clause is a provision in an insurance policy that determines how the insurance proceeds will be distributed among the policyholders. The distribution is based on the proportion of coverage each policyholder has.
For example, let's say there are three policyholders with a total coverage of $300,000. Policyholder A has coverage of $100,000, Policyholder B has coverage of $150,000, and Policyholder C has coverage of $50,000. If there is a loss of $150,000, the insurance company will distribute the proceeds based on the proportion of coverage each policyholder has. Policyholder A will receive $50,000, Policyholder B will receive $75,000, and Policyholder C will receive $25,000.
The apportionment clause ensures that each policyholder receives a fair share of the insurance proceeds based on their coverage. It is a common provision in insurance policies, especially those that cover multiple policyholders or properties.