When insurers apply contribution by equal shares, what happens to claims?

When insurers apply contribution by equal shares, claims are paid up to the policy limit by each insurer. This method involves each participating insurer in a situation where more than one policy covers the same loss contributing equally up to a predetermined limit.

This approach ensures a fair distribution of the claim amount among the insurers involved, so each insurer pays a specified amount until the total loss is covered or until their respective policy limits are reached. The mechanism of equal shares helps to avoid underinsurance and ensures that the insured receives a fair compensation without any insurer feeling overburdened compared to others.

This method of contribution contrasts with other approaches where limitations could exist, such as fixed amounts or assessments of damage leading to varying levels of payout, which would not be the case under equal shares.