State RegulationsPA specificDifficulty 3/5
An insured holds accident and health coverage from two insurers. A claim arises, and the combined benefits the two policies would pay exceed the loss actually incurred. Under the other-insurance provision of 40 P.S. § 753(B)(3), how does the insurer handle the duplication?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
The other-insurance provisions of the Pennsylvania uniform general provisions, anchored at 40 P.S. § 753(B)(3) and its companion expense-incurred and other-benefits provisions, prevent overinsurance: when coverage in this insurer plus other coverage would produce benefits exceeding the allowable expense or loss, this insurer's payment is limited to its prorated share. The insured is made whole, not paid twice.
Why the other options are wrong
- A) Collecting duplicative benefits in excess of the loss is exactly what the other-insurance provision exists to stop.
- B) Owning coverage from more than one insurer is lawful; the consequence is coordination of benefits, not denial.
- D) Coordination is built into the policy provisions themselves under 40 P.S. § 753(B)(3); the department does not allocate payments claim by claim.
Memory hook
Two policies, one loss: prorate to the loss, never profit from pain.