What is a key guideline of apportionment in settling claims?

The key guideline of apportionment in settling claims revolves around how multiple insurance policies interact when there is a loss. Apportionment is designed to ensure that, when an insured has multiple insurance policies covering the same risk, those policies work together to cover the loss without allowing the insured to receive more than their actual loss, which could be described as "double recovery," a situation where the insured is compensated more than what's lost.

Choosing to have policies coordinate to share losses is crucial because it establishes a framework where each insurer contributes to the settlement based on the coverage limits and the terms of their respective policies. This method promotes fairness and prevents the insured from profiting from the insurance coverage. It operates under the principle that losses should be shared according to the interest each policy has in covering the described risk. By having a coordinated approach, insurers can systematically work together to provide a settlement that respects the limits and conditions outlined in each policy.

In contrast, the other options mischaracterize the principles of apportionment. Settlements based solely on the first policy would not address the potential overlap and multiple liability of various policies. Facilitating "double recovery" undermines the integrity of the insurance system and can lead to unethical claims practices. Requiring each policy to pay