TITLE 11 DOUBLE INSURANCE

Binding effect of stipulation against double insurance

Section 95.
Policy which contains NO stipulation against
A double insurance exists where the same
person is insured by several insurers separately additional insurance is NOT invalidated by the
in respect to the same subject and interest. procuring of such insurance

Policy of fire insurance contains stipulation or

condition that they shall be avoided if additional
insurance is procured on the property WITHOUT
Double insurance defined the insurers consent

Double Insurance
1.) Additional insurance obtained by the insured
Exist where the same person is insured by
several insurers separately in respect to the o Commonly known as the additional or
same subject and interest other insurance clause

o Also known as co insurance Intended to prevent an

There is co-insurance by 2 or increase in the moral hazard
more insurers
Valid & reasonable, and in
Requisites of double insurance the absence of consent
waiver or estoppel on the
Person insured is the same part of the insurer, a breach
2 or more insurers insuring separately thereof will prevent a
Identity of the subject matter recover on the policy
Identity of interest insured
Identity of risk or peril insured against o To constitute a violation other
insurance must be upon the same
Double insurance distinguished from over-insurance
subject matter, the same interest and
the same risk
Double Insurance Over Insurance
2.) Additional insurance obtained by a 3rd person

There may be NO over-
insurance as when the sum
total of the amounts of the
policies issued DOES NOT
exceed the insurable
interest of the insured
There are ALWAYS several
insurers
When the amount of the o Good or bad faith of the insured
insurance is beyond the
usually is immaterial
value of the insureds
insurable interest
o Insurance obtained by a 3rd person w/o
the knowledge or consent of the
insured NOT affect his rights under
the policy in the absence of ratification
There may be ONLY one
insurer involved
Purpose of prohibition against double insurance

Double insurance & over insurance may exist at Prevent over insurance & thus avert the
the same time or neither may exist at all. perpetration of fraud

Double Insurance term used instead f co-
insurance = when the sums insured exceed the
insurable interest
o There is over insurance by double
insurance
The public as well as the insurer interested in
preventing the situation in which a loss would be
profitable to the insured

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TITLE 11 DOUBLE INSURANCE

There is great temptation upon dishonest
person whose property is insured up to its
fullest value or above it, to bring about its
destruction & the same considerations
undoubtedly tend to lessen the care that may be
exercised by the honest in preventing loss
o Underwriters take every precaution to
avoid over insurance
Rules for payment of claims where there is over-insurance
by double insurance
Contract of insurance is a contract of indemnity
insured can recover NO more than the
amount of his insurable interest whether the
insurance is contained in one policy or several
policies
Principle of contribution

o Requires each insurer to contribute

Section 96. ratably to the loss or damage
considering that the several insurances
Where the insured in a policy other than life is cover the same subject matter &
over insured by double insurance: interest against the same peril

"(a) The insured, unless the policy

otherwise provides, may claim payment
from the insurers in such order as he may
select, up to the amount for which the
insurers are severally liable under their
respective contracts;
"(b) Where the policy under which the
insured claims is a valued policy, any sum
received by him under any other policy
shall be deducted from the value of the
policy without regard to the actual value of
the subject matter insured;
"(c) Where the policy under which the
insured claims is an unvalued policy, any
sum received by him under any policy shall
be deducted against the full insurable value,
for any sum received by him under any
policy;
o They apply ONLY where there is over-
insurance by double insurance
insurance is contained in several
policies the total amount of which is in
excess of the insurable interest of the
insured
Paragraph [e] governs the liability of the
insurers among themselves where the total
insurance taken exceeds the loss.
o Loss is greater than the sum total of all
the policies issued = each insurer is
liable for the amount of his policy

"(d) Where the insured receives any sum in

excess of the valuation in the case of
valued policies, or of the insurable value in
the case of unvalued policies, he must hold
such sum in trust for the insurers,
according to their right of contribution
among themselves;

"(e) Each insurer is bound, as between

himself and the other insurers, to contribute
ratably to the loss in proportion to the
amount for which he is liable under his
contract.