How will ABC Roofing’s covered loss of $150,000 be indemnified under two CGL policies?

In the scenario presented, when determining how indemnification will work under two Commercial General Liability (CGL) policies, it's important to understand how multiple policies respond to the same covered loss. The total covered loss is $150,000, and the various amounts assigned to each insurer indicate their respective share of liability.

Selection of the answer that states KLM Insurance will pay $50,000 while XYZ Mutual will cover $100,000 suggests that the two insurers have different limits of liability or conditions within their policies that apply to this particular loss. Such divisions can occur due to differences in coverage terms, the specific circumstances of the loss, or the structure of the insurance contracts themselves.

In many cases, insurers may have established agreements or rules based on the insured amount, type of coverage, or the nature of the claims. For instance, if KLM Insurance has a lower limit of liability or specific exclusions that reduce their coverage in this instance, their payout would logically be less than that of XYZ Mutual, which may have broader coverage or a higher limit applicable to this loss.

Understanding these dynamics is crucial for an adjuster as it affects how they assess, validate, and process claims against multiple policies. This scenario illustrates the collaborative nature of insurance where covered entities might