3.8.2 Pro Rata Allocation

• Jurisdiction: Arizona

Several states have adopted some type of pro rata allocation method. Some of the methods adopted are set forth below.

Time-on-the-Risk

Under this method the insured is obligated to pay a proportionate amount of the claim, based on the percentage of time the insurer was "on-the-risk." Courts have come up with various ways of how to calculate that amount. One way is to determine the percentage of time the insurer was on the risk during a continuous injury period.^[356] Another way to calculate damages for each insurer is to apply any applicable limits and compare those limits with the pro rata share and depending on which is less, the lesser amount should be the insurer's damages for its policy period.^[357]

Three formulas could be used to...