pro rata clause
- A section within an insurance agreement that only holds the insurance company responsible for a portion of the loss, depending on the coverage that can be obtained from other insurance policies for the same incident
- The homeowner was surprised to learn that due to the pro rata clause in his insurance policy, the company would only cover part of the fire damage.
- When the car was vandalized, the pro rata clause ensured that the auto insurance company only paid a share of the repairs equivalent to their share of the overall insurance coverage.
- Thanks to the pro rata clause in their umbrella policy, the restaurant chain didn't have to pay the full amount for the slip-and-fall claim.