When an individual insures the same asset or property with two or more insurance companies against the same risk, this is known as double insurance. Double insurance is of two types under insurance law, accidental double insurance and intentional double insurance. Intentional double insurance can have legal consequences. When there is double insurance and the insurer comes to know about the same then there are chances that the claim will be unnecessarily delayed. Because this gives them a chance to debate regarding whether they need to insure or not. Most of the insurance policies have revocation clauses under the various clauses pertaining to double insurance in India. It gives a right to an insurance company to revoke the policy in case of double insurance. Here in the current blog other important clauses pertaining to Double insurance in India will be discussed in detail.
What is Double Insurance?
Double insurance occurs when a person gets two or more insurance policies for the same thing, like a possession or property. This can happen accidentally if someone forgets they already have a policy and gets a new one or, it can happen on purpose, where someone gets multiple policies to get more money if they need to make a claim. Having too much insurance on the same thing is called over-insurance. This happens when someone has more than one insurance policy for the exact same thing or part of it.
What is Insurance Policy?
An insurance policy is a legal document where everything like terms and conditions, risks, details of insured assets and property, details of the insurer and insured person, etc. has been given. Insurance policies are made up of different clauses. Some of the clauses pertaining to double insurance in India have been discussed below. These policies play a very important role during the time of their implementation. Hence before signing any such policy always read it twice.
Important Clauses Pertaining to Double Insurance In India
Double Insurance is always governed by a policy that is known as an insurance policy. This policy is made up of different clauses. Given below are some important clauses pertaining to double insurance In India :
Prohibition of Double Insurance
One of the most common clauses pertaining to double insurance is the “prohibition of double insurance clause”. This clause prohibits the insured person from insuring the same asset or property with two or more insurance companies. This is to prevent the insured person from receiving unlawful gain from the insurance companies. The main aim of this clause is to help in reducing the risk of over-insurance and fraud in the market.
Notice of Existing Insurance Clause
Notice of existing insurance clause ensures that there is no pre-existing policy regarding the insurance of the same assets and property against the same risks. This clause is for the safety of insurance companies against double insurance. Double insurance creates chaos at certain times hence to avoid any such situations insurance companies make sure about the same before providing insurance to any person. This saves insurance companies from over-insurance.
Contribution Clause
One of the most important clauses pertaining to double insurance in India under an insurance policy is the contribution clause. This saves the insurers up to a certain limit. As already mentioned under double insurance two insurers are involved. The contribution clause states that whenever such a situation arises then both the insurers contribute to insure in proportion. And they will insure up to the limit of total coverage provided by their policy. In this way insured person will get the amount that he or she actually lost. Also as per this clause, one will not get the amount that is more than the actual value of the asset or property.
Co-Insurance Clause
To a certain extent, this clause bears resemblance to the contribution clause. The co-insurance clause serves the purpose of ensuring that the insured individual does not receive a sum exceeding the genuine value of their assets or property. Should a circumstance arise where they receive an amount surpassing the actual value, they are obligated to reimburse the excess back to the insurance providers. This reimbursement aspect sets apart the co-insurance clause from the contribution clause. By necessitating this repayment, the co-insurance clause effectively deters the insured party from excessive coverage and also acts as a deterrent against fraudulent actions.
Excess Insurance Clause
Excess liability insurance policies have this clause called excess insurance clause. As the name of the clause itself suggests its meaning is excess. Excess means extra or more than the existing one. With respect to insurance, the excess insurance clause means the policy will cover the extra amount than the primary insurance policy. This means excess insurance policy only covers the amount that exceeds the primary insurance policy amount. This is among the clauses pertaining to double insurance in India that protects the insurer over insurance.
Revocation Clause
Out of the important clauses pertaining to double insurance in India, one is the revocation clause. The revocation clause guides about how and in which circumstances the insurance policy can be revoked. Everything regarding revocation has been given under his clause. The insurance company can revoke the policy under certain conditions and these condition has been given under this clause. If any insurance policy does not have a revocation clause then the company cannot revoke the policy. We can say that it is a right given to the insurance company under the insurance policy.
Conclusion
Intentional double insurance can have legal consequences which can result in over-insurance. Such kind of activities can cause fraud in the market. To prevent such situations, insurance policies have clauses pertaining to double insurance in India. Such clauses require the insured person to inform the insurance company about any existing insurance with the third party. Insurance policies have many provisions that can help the insurers while providing insurance to the insured party with double insurance. These clauses pertaining to double insurance in India ensure that insurance policies will provide only the intended protection to the insured person. An insurance policy is one of the most relevant and important documents of the insurance hence it is important to read and understand the clauses in insurance policies properly before signing it.
