James purchased liability insurance with a $100,000 limit from Insurer A. When Insurer A denied a claim that James thought should be covered, he bought a second liability insurance policy with a $150,000 limit from Insurer B. Before he cancelled the policy with Insurer A, a $60,000 loss occurred. If this loss is settled on a pro rata basis, how much must each insurer pay?

James purchased liability insurance with a $100,000 limit from Insurer A. When Insurer A denied a claim that James thought should be covered, he bought a second liability insurance policy with a $150,000 limit from Insurer B. Before he cancelled the policy with Insurer A, a $60,000 loss occurred. If this loss is settled on a pro rata basis, how much must each insurer pay?



A) Insurer A will pay $10,000 and Insurer B will pay $50,000.

B) Insurer A will pay $20,000 and Insurer B will pay $40,000.

C) Insurer A will pay $24,000 and Insurer B will pay $36,000.

D) Insurer A will pay $40,000 and Insurer B will pay $20,000.



Answer: C) Insurer A will pay $24,000 and Insurer B will pay $36,000.

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