An apportionment clause is a policy term that defines how co-insuring companies divide a shared loss.
Insurance mechanics
The clause is triggered when two or more contracts respond to the same peril and the same insured interest.
It sets a formula, often based on each policy’s limits or percentage shares, so each insurer pays a defined portion.
Claims logic
Claims teams apply the clause before payment to avoid disputes over “double recovery.” The clause helps determine whether coverage is:
- proportional by limit,
- capped at each policy limit, or
- subject to an excess/primary hierarchy.
Underwriting and contract design
Policy wording is critical because broad apportionment language can reduce disputes later. Underwriters commonly align clause wording with broker declarations and treaty summaries for coordinated response.
Example
Two liability policies each with a $1,000,000 limit cover the same event, and one has a $200,000 deductible. If the loss is $600,000 and the first policy pays all deductible-related costs first, the remaining amount may then be split according to policy share language.