Pro Rata

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Pro Rata

[Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share.

In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. If the debtor has any remaining funds, the money is divided proportionately among the creditors, according to the amount of the individual debts.

A pro rata clause in an automobile insurance policy provides that when an insured person has other insurance policies covering the same type of risk, the company issuing the policy with the pro rata clause will be liable only for a proportion of the loss represented by the ratio between its policy limit and the total limits of all the available insurance.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

pro rata

(proh rat-ah or proh ray-tah) adj. from Latin for "in proportion," referring to a share to be received or an amount to be paid based on the fractional share of ownership, responsibility, or time used. Examples: an heir who receives one-quarter of an estate may be responsible for one quarter of the estate taxes as his/her pro rata share. A buyer of a rental property will pay his/her pro rata share of the property taxes for that portion of the year in which he/she holds title.

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.

PRO RATA. According to the rate, proportion or allowance. A creditor of an insolvent estate, is to be paid pro rata with creditors of the same class.

A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.
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