Energy Industries, Inc., obtains insurance policies with Fidelity Insurance, Inc., and Goodworth Insurance Company against the risk of loss of Energy's property. Each policy includes a multiple insurance clause. A fire partially destroys one of Energy's buildings. Energy can collect from Fidelity

Question

Quizplus · Accepted Answer

The multiple insurance clause means that when there is more than one insurance policy covering the same property, each insurer is responsible only for a proportional share of the loss. Therefore, Energy can collect only its proportionate share of the loss, which is determined by dividing the amount of insurance provided by Fidelity by the total amount of insurance provided by Fidelity and Goodworth.