Q.Distinguish between Double Insurance and Reinsurance.

Both terms involve more than one insurer, but the party doing the arranging — and who has rights against whom — is completely different in each.

Double Insurance occurs where the SAME subject-matter is insured against the SAME risk, by the SAME insured, with TWO OR MORE insurers — whether under one combined policy or several separate policies. Since general insurance is a contract of indemnity, the insured can never recover, across all the policies together, more than the actual loss he has genuinely suffered. Whichever insurer pays the insured is then entitled to claim contribution — a proportionate share — from the other insurer(s) covering the same risk.

Reinsurance, by contrast, is a contract between an insurer (who has already accepted a risk from the original insured) and a SECOND insurer, called the reinsurer, whereby the original insurer transfers PART of that same risk onward, in order to reduce and spread its own exposure to what might otherwise be too large a single risk. Reinsurance is purely a contract BETWEEN the two insurers — the original insured is not a party to it, has no privity of contract with the reinsurer, and can claim nothing directly from the reinsurer; the original insurer alone remains fully liable to the insured for the whole claim.

Key distinction: in double insurance, the INSURED arranges multiple covers and can claim against any of the insurers; in reinsurance, the INSURER arranges the further cover, and the insured has no relationship with the reinsurer at all.