Apportionment

What Does Apportionment Mean?

Apportionment is a legal term that refers to the distribution of a loss among all the insurance companies that have provided coverage for that loss. It is the process by which liability is assigned to each insurer, determining the percentage of coverage they are responsible for and the corresponding amount they must pay for the insured loss.

Insuranceopedia Explains Apportionment

Because multiple parties can have an insurable interest in a property, there may be more than one insurance policy covering it. For example, if a property worth $100,000 is insured by two separate parties and is deemed a total loss due to an insured peril, the liability may be equally divided between the two insurers, meaning each would cover 50% of the loss (in this case, $50,000). When two homeowners policies cover the same property, the apportionment process decides how much each insurer pays, which is one reason to compare what different insurers actually pay out in shared-loss situations when looking at the best homeowners insurance companies.

In cases where fault must be determined, the apportionment may not be equal. For instance, if there is a $100,000 loss and one party is found to be 15% responsible while a second party is found to be 85% responsible, only 15% of the burden may fall on the first party’s insurance, with the remaining loss covered by the second party’s insurer. Apportionment based on fault is common in multi-vehicle auto claims, and how an insurer handles shared liability is part of what separates top-rated car insurance companies from the rest.