Apportionment Clause

What Does Apportionment Clause Mean?

An apportionment clause is a provision in a property insurance policy that specifies how much the insurance company will pay for a loss or damage if the insured has another policy covering the same risk.

Insuranceopedia Explains Apportionment Clause

Suppose you have two insurance policies that cover the same property against fire. If the building is damaged by fire, the apportionment clause will specify how much you can claim from each of these two policies. As with any insurance policy, the total amount you can claim will not exceed the value of the damage or loss. The apportionment ensures that you cannot claim from both policies and profit from the situation.

Overlap is more common than people realize. Homeowners sometimes buy a personal property floater to cover jewelry or electronics, only to find that those items are already partially covered under their main policy, which is where apportionment rules come into play. Reading the fine print on what their homeowners insurance actually covers can help policyholders avoid paying twice for protection they already have. Apportionment language can also differ from one insurer to another, so it is worth comparing the wording when looking at top-rated homeowners insurance companies.