If a corporation has coverage of $100,000 and $50,000 on the same building, what will each insurer pay for a $24,000 loss using the pro rata method?

To understand the correct answer, it is essential to look at how the pro rata method distributes the claims when multiple insurance policies cover the same loss. The pro rata method allocates the loss based on the ratio of the coverage amounts provided by each insurer.

In this scenario, one insurer has coverage of $100,000 and the other has a coverage of $50,000, making a total coverage of $150,000 for the building. When a $24,000 loss occurs, the pro rata method determines how much each insurer pays based on their share of the total coverage.

First, we calculate the ratio of each insurer's coverage to the total coverage:

• For the insurer with $100,000 coverage, the ratio would be: [ \frac{100,000}{150,000} = \frac{2}{3} ]

• For the insurer with $50,000 coverage, the ratio is: [ \frac{50,000}{150,000} = \frac{1}{3} ]

Now, we apply these ratios to the $24,000 loss:

• For the first insurer (with a $100,000 coverage): [ \frac{