Question 10

The loss will be shared proportionately by the two contracts.

In the event that a loss is covered by another policy written on the same basis as the Commercial Inland Marine policy, the loss will be shared proportionately. This means that each policy will contribute to the claim based on its respective limits and coverage terms.

A) The loss will be shared equally by the two contracts

This option is incorrect because sharing a loss equally implies that both policies would cover 50% of the loss regardless of their individual limits. In reality, loss sharing is based on the proportionate limits of each policy rather than a fixed equal split.

B) The loss will be shared proportionately by the two contracts

This option is correct as it accurately describes the method of loss sharing under the 'Other Insurance' condition. When two policies are written on the same basis, they will each pay a portion of the loss that corresponds to their respective coverage limits.

C) The marine policy will be primary and the other policy will be excess

This option is incorrect because it suggests a hierarchy of coverage that does not apply when both policies are written on the same basis. The 'Other Insurance' condition does not designate one policy as primary over the other in such cases.

D) The other policy will be primary and the marine policy will be excess

This option is also incorrect for the same reasons as Option C. The sharing of loss is proportionate when both policies are on the same basis, and no single policy is designated as excess.

Conclusion

The correct answer is B because it reflects the actual sharing of losses between policies written on the same basis, which is done proportionately according to their limits. All other options misinterpret the 'Other Insurance' condition by either implying equal sharing or establishing a primary/excess hierarchy that does not apply when policies are similar.