Q.Write a short note on: Double Insurance.

Double insurance is where the same risk/property is insured with more than one insurer at the same time; on a loss the insured can claim from all but cannot recover more than the actual loss (principle of indemnity).

Double Insurance

Double insurance occurs when a person insures the same subject matter against the same risk with two or more insurance companies for the same period. For example, a shopkeeper insures the same stock worth a certain value against fire with two different insurers. It is legal and often done to be sure of recovery. However, because insurance (other than life) works on the principle of indemnity, the insured cannot make a profit out of it — the total compensation recovered from all insurers together cannot exceed the actual amount of loss suffered. The insurers share the loss in proportion to the sums they have insured (this is linked to the principle of contribution). This aligns …