(1) Where two or more policies are effected by or on behalf of the assured on the same adventure and interest or any part thereof, and the sums insured exceed the indemnity allowed by this Act, the assured is said to be over-insured by double insurance.

What is called double insurance?

‘ Double insurance occurs when a business has insurance cover in respect of the same risk and subject matter from more than one insurer. Double insurance is not of itself a problem, but it can lead to insurers arguing about whether they need to pay out at all causing unwanted delay in the processing of claims.

What is the purpose of double insurance?

Double insurance refers to the method of getting insurance of same subject matter with more than one insurer or with same insurer under different policies. This means that one can get insurance policies on a subject matter more than its value. Double insurance is possible in all types of insurance contracts.

What is the difference between reinsurance and double insurance?

In double insurance, the same risk is insured with different insurance companies or more than one insurance company. In the reinsurance, the risk or a part of the risk is transferred to another insurance company. The risk remains the same. The reinsurer will only be liable to pay the proportion of the reinsurance.

What is difference between reinsurance and double insurance?

In double insurance, the same risk is insured with different insurance companies or more than one insurance company. In the reinsurance, the risk or a part of the risk is transferred to another insurance company. The risk remains the same. This insurance is basically taken for properties having a high value.

How does double insurance work in a business?

The insured person, or simply the insured, can choose either of the two companies to claim compensation from. The second insurer (who hasn’t yet paid out) will still need to pay a share to the company that has paid out. The insured may have problems in getting compensation if they have double insurance.

Why are there protection clauses in double insurance?

To combat the possibility of claims from other insurers many insurers insert protection clauses in their policies. These can include: A rateable proportion clause acts to prevent an insured from claiming their full loss from one insurer. Instead, they provide that each insurer will be liable for a rateable proportion only.

What is the rateable proportion in double insurance?

“Rateable proportion” clauses in liability insurances: Each insurer is liable independently of the existence of double insurance. If the first insurance covers £10,000 and the second insurance £20,000, and the loss is £5,000, then each insurer will be independently liable for the full amount and they will share it equally.

How does double insurance work for Hamersley insurance?

So, Hamersley now had two policies in which it was the insured, covering the same sorts of risks. This double insurance is not rare, and insurers try to deal with it by including an “other insurance” term to limit or exclude their own liability. Enter section 45 of the Insurance Contracts Act. This tries to sort out the confusion by saying that: