If a risk is co-insured between two insurers and one becomes insolvent, what is the responsibility of the other insurer?

When a risk is co-insured between two insurers, each insurer has a specific percentage of the coverage set forth in the insurance contract. If one insurer becomes insolvent, the other insurer remains responsible only for its agreed-upon percentage of the risk. This means that the solvent insurer is not obligated to cover the full claim amount or the percentage that the insolvent insurer would have covered.

In a co-insurance arrangement, each insurer shares the risk and liability, and their obligations are delineated clearly in the contract. Therefore, if one party defaults due to insolvency, the remaining insurer’s liability doesn't change; it is limited to the contract terms. This principle ensures that insurers are able to remain solvent and manage their share of risk without being liable for the default of another insurer.

In contrast, the other options suggest responsibilities that are either excessive or do not reflect the nature of co-insurance arrangements. For instance, declaring the contract void would ignore the valid obligations of the solvent insurer, while stating that it must settle the claim in full does not align with the basic principles of contract law and insurance liability.