What is ‘double insurance’?
Double insurance arises where the same party is insured with two or more insurers in respect of the same interest on the same subject matter against the same risk and for the same period of time.
- Same insured: There can be no double insurance unless at the time of the claim, the same person is entitled to benefit from each policy.
- Same subject matter: It is not clear whether the policies must cover exactly the same property in its entirety or whether covering a substantial part of the property would suffice. What is important is that the subject matter in respect of which the claim is made is covered under both policies.
- Same risk: Double insurance will only arise if a substantial part of the same risk is covered by both insurances.
- Same interest: The policies must also cover the same interest. This is due to the fact that it is not the subject-matter of the insurance as such which is covered by the policy but the insured’s interest in it. There would therefore be no double insurance if two people who have different interest in the subject matter insure their own interest.
- Same period of time: Finally, the periods of time within each of the policies’ terms during which the insured party is protected from the risk must be the same, or substantially the same. It must also be during that period of time that the event giving rise to the claim occurs.
(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.
(2) Where the assured is over-insured by double insurance—
(a) the assured, unless the policy otherwise provides, may claim payment from the insurers in such order as he may think fit, provided that he is not entitled to receive any sum in excess of the indemnity allowed by this Act;
(b) where the policy under which the assured claims is a valued policy, the assured must give
credit as against the valuation, for any sum received by him under any other policy, without
regard to the actual value of the subject-matter insured;
(c) where the policy under which the assured claims is an unvalued policy, he must give
credit, as against the full insurable value, for any sum received by him under any other
policy;
(d) where the assured receives any sum in excess of the indemnity allowed by this Act, he is
deemed to hold such sum in trust for the insurers, according to their right of contribution
among themselves.
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