What does the "other insurance" clause specify?

The "other insurance" clause is a critical component within insurance policies that addresses situations where more than one policy may apply to a given loss. This clause specifically outlines how losses are to be handled when multiple insurance policies cover the same risk or event.

The correct choice, which indicates that each policy pays no more than its share of the loss, reflects the principle of pro rata sharing of losses. This means that if a loss occurs and multiple insurance policies cover it, each insurer will contribute to the payment of the loss concurrently but only to the extent of their respective coverage limits.

In scenarios where there are two or more applicable policies, this clause helps to ensure that no single policy is responsible for the entire loss unless it is designated as primary coverage. Instead, the financial responsibility is distributed among the involved insurers, which prevents situations of over-insurance and ensures fairness in claiming settlements.

By contrast, options suggesting that only one policy pays or that additional policies invalidate a primary policy misrepresent how insurance typically operates under the "other insurance" clause. Hence, the correct option accurately encapsulates the intention and operational mechanics behind this aspect of insurance policy language.