When more than one insurance company is involved, which term describes their shared responsibility to compensate for a claim?

The term that describes the shared responsibility of multiple insurance companies to compensate for a claim is "Contribution." This concept arises when a policyholder has more than one insurance policy covering the same risk or loss. In such cases, each insurer contributes to the settlement of the claim in proportion to the coverage amounts they provide. This ensures that the policyholder does not receive more than the total value of the loss, preventing potential profit from a claim.

For example, if a person has two insurance policies on a single item, and a loss occurs, both insurance companies will work together to cover the claim costs. Contribution helps ensure fairness among insurers and prevents excessive payouts beyond the actual loss incurred.

The other terms, while related to insurance, do not reflect this shared responsibility. "Under Insured" implies that a policy does not provide sufficient coverage compared to the risk, "Over Insured" indicates excessive coverage that exceeds the value of the property, and "Fully Insured" suggests that a policyholder has coverage that fully protects them against loss but does not address the situation of multiple insurers sharing the claim responsibility.