Double insurance


Whenever the same subject matter is insured with two or more insurers to cover the same risk, it is called double insurance. The principle of contribution applies to all double insurance contracts. Accordingly, when there is a double insurance, the insured is entitled to recover only the actual amount of loss. He cannot claim anything more than the actual amount of loss, although he has taken two or more policies. He can recover the entire loss either from the insurer or from all insurers. If the insured chooses to recover the entire loss from one insurer alone, then the insurer, who has paid the actual loss has a right to recover proportionate amounts from the other insurers. In other words, each insurer is bound to contribute to the loss of the insured in proportion to the policy amount. The right of the insurer to contribution from the part of the co-insurers may be explained clearly by means of an example. Suppose, A insures his house against fire with Y and Z for Rs. 15,000/-each, the house is destroyed po by fire and the actual amount of loss came to Rs. 10,000/- Here A can recover the loss either from Y or Z or he may recover Rs.5,000/- from Y and Rs. 5,000/- from 2. If A recovers Rs.10,000/ from Y, then Y has a right to contribution of Rs.5,000/-from Z. This principle is applicable to all insurance contracts other than life and personal accident insurance contracts. 

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