What is the abnormality encountered when multiple policies cover the same property?

Pro-Rata Liability is the correct concept to understand in the context of multiple insurance policies covering the same property. When multiple policies are in effect, Pro-Rata Liability dictates how claims will be paid out based on the proportionate amounts of coverage provided by each policy. This principle ensures that no single policy pays for the entire claim, but rather each contributes a portion based on its coverage limits relative to the total coverage available across all policies involved.

For instance, if two policies each cover the same property, and one policy covers $100,000 while the other covers $50,000, in the event of a loss, the insurers would pay their respective shares of any covered claim based on their limits. This helps to prevent policyholders from profiting from their coverage beyond the actual loss they incur, maintaining the principle of indemnity that underlies property insurance.

The other concepts presented relate to distinct ideas. Excess Coverage refers to the additional coverage that kicks in after primary coverage has been exhausted, while Concurrent Insurance simply denotes having multiple policies in effect at the same time without detailing the interaction between them in the event of a loss. Policy Overlap is not a term typically used in the insurance context and could cause confusion about the nature of policy interactions.