What is the process of dividing a loss among multiple insurers called?

The process of dividing a loss among multiple insurers is referred to as apportionment. Apportionment occurs when there are several insurance policies covering the same risk, and it is necessary to determine how the financial responsibility for a loss will be shared among those policies. This is important to ensure that no single insurer bears an unfair burden and that the policyholders receive the appropriate coverage as per their respective policies.

In this context, apportionment helps to establish a fair distribution of the loss based on factors such as policy limits and the specific terms of each policy. This is essential in situations where multiple insurers are involved in covering different aspects of a loss, thereby promoting an equitable resolution.

The other terms, while related to insurance concepts, pertain to different processes. Aggregation typically refers to the grouping together of similar risks or losses for purposes of analysis or reporting. Subrogation is the right of an insurer to pursue a third party that caused a loss after the insurer has paid for that loss, allowing the insurer to recover some or all of its costs. Allocation usually refers to the distribution of costs across different areas or time periods, not specifically limited to the division of losses among insurers. Therefore, apportionment is the precise term that describes the process of