All joint accounts owned by the same combination of individuals are first added together and the total is insured up to $125,000. In addition, the person’s insurable interest in each joint account held by different combinations of individuals are added together and the total is insured up to the $125,000 maximum.
(a) For example, assume that A and B own a joint account containing $140,000 and A and C own a joint account containing $90,000. The $140,000 account owned by A and B is insured only to $125,000, leaving $15,000 uninsured. Since the interests of the co-owners of a joint account are deemed equal for insurance purposes (except in the case of a tenancy in common if unequal interests are shown on the account of the institution), the $125,000 is prorated equally between A and B, giving each an insurable interest of $62,500; the $90,000 in the other account is prorated equally between A and C, giving each a $45,000 insurable interest in that account. Thus, A has a total insurable interest of $107,500 in the two accounts, and B and C have insurable interests of $62,500 and $45,000 respectively. Since no person’s total insurable interest exceeds the $125,000 limit, the joint account of A and B will receive $125,000 in insurance whereas the joint account of A and C will receive $90,000.
(b) If on the other hand, A and B have a joint account containing $122,000, A and C a joint account containing $119,000, and A and D an account containing $166,000, and A and E an account containing $83,000, the aggregate of A’s prorated interest in the three accounts amounts of $220,000.
However, A’s interest in each joint account will be abated by $95,000/$220,000 or 43.18% (Excess of Coverage Limit / Aggregated Prorated Interest) so as to restrict total insurance payable to A to $125,000.
Total |
A |
B |
C |
D |
E |
Insurance Payable |
|
A&B |
$122,000 |
$34,659 |
$61,000 |
– |
– |
– |
$95,659 |
A&C |
$119,000 |
$33,807 |
– |
$59,500 |
– |
– |
$93,307 |
A&D |
$116,000 |
$32,955 |
– |
– |
$58,000 |
– |
$90,955 |
A&E |
$83,000 |
$23,580 |
|
|
|
$41,500 |
$65,080 |
|
$440,000 |
$125,000 |
$61,000 |
$59,500 |
$58,000 |
$41,500 |
$345,000 |
The apportionment of A’s interest on each joint account will result in the following insurance payments-: A and B – $95,659; A and C – $93,307; A and D – $90,955 and A and E – $65,080. These total $345,000. Therefore an amount of $95,000 will be uninsured.