What is the purpose of the Separation of Insureds clause in multi-insured policies?

• A. It limits coverage to the named insured only.
• B. It ensures uniform coverage across all insureds.
• C. It doubles the policy limits for all insureds.
• D. It ensures that one insured's claims do not reduce or exhaust the coverage available to other insureds.

Answer: (D)

In a multi-insured policy, this clause keeps coverage separate for each insured so that the claims or losses involving one insured don’t eat into the protection available to the others. It treats each insured as if there were a separate policy for purposes of coverage, so when one insured faces a claim, that claim is handled against that insured’s portion of coverage rather than depleting everyone’s limits. This protects the remaining insureds by ensuring their potential claims aren’t reduced or exhausted simply because another insured had a large or numerous loss. It’s not about limiting coverage to the named insured, nor about creating uniform coverage or doubling limits; it’s about preventing cross-use of limits among insureds.