A restaurant owner has two commercial property policies, Policy A ($400,000 limit, pro-rata other-insurance clause) and Policy B ($200,000 limit, excess other-insurance clause). A covered fire causes $120,000 in loss. How is the loss paid?

Why this is the answer

When a loss is covered by two overlapping policies, the other-insurance clauses interact. Policy A is pro-rata: it pays its proportionate share relative to total coverage. Policy B is excess: it pays only after Policy A is exhausted. Here, Policy A (pro-rata, $400K) is treated as primary; Policy B (excess, $200K) pays only if the loss exceeds what Policy A can pay. Policy A's limit is $400,000, which exceeds the $120,000 loss — so Policy A pays the entire $120,000. Policy B owes nothing because no excess exists beyond Policy A's contribution. The pro-rata share calculation ($400K/$600K × $120K = $80K) applies only if BOTH policies are pro-rata; the presence of Policy B's excess clause removes it from the pro-rata pool. See FL Outline §III — other insurance.