How much of a $100,000 liability loss will Company A pay if it has a limit of $100,000 and Company B has a limit of $25,000?

In a liability loss scenario where multiple insurers are involved, the total payout is determined by the policy limits of each company relative to the total loss amount. In this case, Company A has a limit of $100,000, and Company B has a limit of $25,000, while the total liability loss amounts to $100,000.

To find out how much Company A will pay, we need to examine the situation with the understanding of how liability often operates between primary and excess coverage. Assuming Company A is the primary insurer with a higher limit, it will cover the loss after Company B pays out its maximum limit.

Company B can only pay $25,000 towards the total loss. After Company B pays its limit, which leaves a remaining balance of $75,000 (i.e., $100,000 total loss minus $25,000 covered by Company B). Since Company A's limit of $100,000 covers the entire remaining amount, it will indeed be responsible for that $75,000.

Therefore, Company A would pay the full amount remaining after Company B’s limit is exhausted, which is $75,000. This illustrates the concept of layered coverages in liability policies, where each company pays according to their respective limits