If Harold purchased separate policies from three different companies with limits of $100,000 each, how much will each company pay for a loss according to the pro rata liability clause?

The pro rata liability clause states that when multiple insurance policies cover the same loss, each insurer pays a portion of the claim based on the ratio of their coverage limits to the total coverage in place. In this scenario, Harold has purchased three separate policies, each with a limit of $100,000. This gives a total coverage of $300,000 ($100,000 from each of the three policies).

To determine how much each company will pay out in the event of a loss, we can calculate the proportion of each policy relative to the total coverage. Since each policy has the same limit, each company will contribute equally to the payout.

For each company, the calculation is as follows:

1. Individual policy limit: $100,000

2. Total of all policy limits: $300,000

3. Proportion of each policy: $100,000 / $300,000 = 1/3 or approximately 33 1/3%.

Thus, according to the pro rata liability clause, each of the three insurance companies will pay out 33 1/3% of the total claim, reflecting their portion of the total coverage. This explains why the correct answer is 33 1/3%.