When other insurance is written on the same basis as a commercial property policy, how is the insurer's obligation defined?

In situations where multiple insurance policies cover the same risk on a similar basis, the insurer's obligation is typically defined as sharing the loss among all involved insurers. This principle is known as "contribution" and is rooted in the idea that when a loss occurs, each insurer is responsible for a proportionate share of the claim based on the amount of coverage they provided.

This sharing of the loss ensures that the insured does not receive more than the actual loss suffered and prevents the phenomenon of "over-insurance," where the insured might profit from the claim. By dividing the loss among insurers, it maintains fairness and upholds the principle of indemnity, which is fundamental in insurance practice.

This approach contrasts with options that suggest covering all of the loss, or applying primary or excess coverage without sharing, which would not adequately reflect the situation where multiple policies are in place. Each insurer's role is determined by their respective amounts of coverage and the proportion of the total risk they underwrite.