Kevin has three liability policies which provide for contribution by equal shares if other insurance applies to a loss.How much will each policy pay for a $3,000,000 liability judgment if policy A provides $500,000 of coverage,policy B provides $1,000,000 of coverage,and policy C provides $3,000,000 of coverage?
A)Each policy will pay $500,000,and Kevin must pay the remaining $1,500,000.
B)Policy A will pay $500,000,policies B and C will each pay $1,000,000,and Kevin must pay the remaining $500,000.
C)Policy A will pay nothing,policy B will pay $1,000,000,and policy C will pay $2,000,000.
D)Policy A will pay $500,000,policy B will pay $1,000,000,and policy C will pay $1,500,000.

Question

Quizplus · Accepted Answer

Since the policies provide for contribution by equal shares, each policy will pay 1/3 of the total judgment. Therefore, Policy A will pay $500,000, Policy B will pay $1,000,000, and Policy C will pay $1,500,000. The total amount paid by all three policies will be $3,000,000, which covers the entire liability judgment.

Kevin Has Three Liability Policies Which Provide for Contribution by Equal