JumpySubsequentDolphin
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Simple English definitions for legal terms
equal-shares clause
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A quick definition of equal-shares clause:
An equal-shares clause is a rule in insurance that says the insurance company must pay their fair share of a loss that is claimed. This means that if there is a loss, the insurance company will pay a portion of the cost, based on how much they agreed to cover in the policy. It's like everyone pitching in to help pay for something that went wrong.
A more thorough explanation:
Definition: An equal-shares clause is a provision in an insurance policy that requires the insurer to pay its fair share of a claimed loss.
Example: Let's say a building insured by two different insurance companies suffers damage from a fire. The total cost of the damage is $100,000. If both insurance policies have an equal-shares clause, each insurer would be responsible for paying $50,000 towards the claim.
Explanation: The equal-shares clause ensures that each insurer pays their fair share of the loss. In the example above, both insurers are responsible for paying half of the total cost of the damage, which is $50,000 each. This clause helps to prevent one insurer from bearing the entire burden of a loss, which could be unfair and financially damaging.