How is the amount payable on a covered claim determined in relation to other coverages?

The correct choice indicates that the amount payable on a covered claim is reduced by the limits of other applicable coverage. In the context of insurance, this is known as the concept of "other insurance" or "coordination of benefits." When multiple policies or coverages are in place, the total payment for a valid claim may not exceed the total loss incurred.

This means that if there are multiple insurance policies in effect for the same claim, the amount payable under one policy will be adjusted based on the limits and benefits available under the other applicable policies. This ensures that the insured does not receive a windfall by being compensated more than their actual loss, and helps to maintain fairness across the insurance system.

The other options do not clarify the relationship between the coverage amounts of multiple policies in the context of a claim. It is essential for policyholders to understand how their claims interact with other coverages to avoid any confusion during the claims process.