Gridco,Inc

question 32

Multiple Choice

Gridco,Inc.owns the building in which its offices are located.On April 1,Gridco insured the building with Olden Days Insurance Co. ,which issued a $200,000 face amount policy.The Olden Days policy contained a pro rata clause.Keeping that policy in force,Gridco procured an additional policy on the building on June 15.This policy,had a $600,000 face amount and contained a pro rata clause,was issued by Big City Insurance Corp.On August 10,while both policies were in force,lightning (a covered peril under each policy) struck the Gridco building.This sparked a fire that resulted in $72,000 of damage to the warehouse.Gridco has filed claims and proofs of loss with Olden Days and Big City.Which of the following correctly sets forth the amounts the respective insurers must pay Gridco?

• A)Olden Days: $72,000;Big City: 0.
• B)Olden Days: $18,000;Big City: $54,000.
• C)Olden Days: 0;Big City: $72,000.
• D)Olden Days: $24,000;Big City: $48,000.