What is the purpose of apportionment in insurance claims?

The purpose of apportionment in insurance claims is primarily focused on preventing double recovery. When multiple policies cover the same loss, apportionment ensures that the insured does not receive more than what the actual loss amounts to by dividing the claim proportionally among the insurers involved based on their respective coverage limits. This process helps maintain fairness in the claims process and makes sure that the insured only recovers up to the actual damages incurred, rather than profiting from their insurance policies.

In the context of this principle, preventing double recovery is essential in maintaining the integrity of the insurance system and protecting the financial viability of insurers. This allows insurers to uphold their roles without unjustly inflating claims payouts, which could ultimately lead to higher premiums for all policyholders. By implementing apportionment, insurance companies support a more sustainable and equitable claims process.