Apportionment of Insurance

Apportionment of Insurance refers to the practice in cargo transportation insurance where, when the same shipment is co-insured by multiple insurers, or when the insured amount is lower than the actual value of the goods (underinsurance), each insurer apportions the loss compensation according to their respective underwriting proportion or the ratio of the insured amount to the insured value. It is commonly seen in open cover, co-insurance, or reinsurance scenarios. Usage scenarios include: goods split across multiple policies, buyer and seller each insuring separately, letters of credit requiring insurance but actual cargo value exceeding the insured amount, etc. Notes: Before apportionment, it is necessary to clarify each policy's coverage scope, insured amount, and whether the 'pro rata apportionment clause' applies; if it is underinsurance, the insured must bear the loss of the uninsured portion themselves. Unlike 'subrogation', apportionment resolves the division of liability among multiple insurers, rather than pursuing recovery from a third party; it is related to 'double insurance', but double insurance emphasizes that the same interest has multiple policies, and apportionment is one of its compensation principles. Foreign trade practitioners should clearly specify insurance obligations and insured amounts in contracts to avoid insufficient claims due to apportionment.