What Does Apportionment Mean?
Apportionment is a legal term that refers to the distribution of a loss between all of the insurance companies that have insured against that loss. It is a process by which liability is assigned to each insurer determining what percentage of the coverage they are responsible for and what corresponding percentage they have to pay for the insured loss.
Insuranceopedia Explains Apportionment
Because multiple parties can have an insurable interest in some property, there may be more than one insurance policy covering it. If a property worth $100,000 is insured by two separate parties and is deemed a total loss as the result of an insured peril, the liability may be equally divided between the two insurers, meaning that each would be apportioned 50% (in this case, $50,000) of the loss.
In cases where fault has to be determined, the apportionment may not be equal. If there is a $100,000 for which 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 being covered by the second party’s insurer.