Los Angeles Claims Adjuster Property and Causality Practice Exam

What type of agreement indicates how an insurer will share losses if there is other insurance covering the property?

1. Service Agreement

2. Loss Payable Clause

3. Other Insurance and Service Agreement

4. Supplementary payments

The correct answer is: Other Insurance and Service Agreement

The correct choice addresses the concept of how an insurer shares losses when multiple policies provide coverage for the same risk. This is essential in the insurance field, where various policies might coexist and cover an identical asset or risk. The "Other Insurance and Service Agreement" clearly delineates the responsibilities between different insurers, ensuring that in the event of a loss, the parties understand how the loss will be apportioned according to their respective coverages. This type of agreement typically outlines whether one policy will respond first, how limits will be applied, and how the insurers will coordinate their payments to prevent both underinsurance and overinsurance. It is crucial for clarity and efficiency in claims handling when several insurers are involved, ensuring that the insured does not receive more than the loss amount while each insurer knows its role. The other options do not specifically encapsulate this concept. A "Service Agreement" generally refers to the arrangement of the services provided by one party to another and does not delve into loss sharing. A "Loss Payable Clause" deals more with the payment direction for claims but does not address how much insurers will pay when multiple policies are in play. "Supplementary payments" usually refer to additional payments made by an insurer beyond the policy limits for particular expenses, like legal