How to update the basics of your claim

Throughout my career, I have frequently come across some misconceptions among common people, regarding insurance claims, who think that having insurance against loss or theft or any other insured peril or risk is the only criterion. to receive full payment from the financier. loss they suffer to their homes, cars or property.

You probably have these misconceptions. Let me clarify this with some examples. Let’s say he recently bought a couple of personal insurance policies and, being a fan, one of his close friends also bought a couple of homeowners insurance policies for double the benefits. Now, suppose that in a car accident, he has broken one of his legs and, naturally, he has claimed and has been paid in full by both insurers.

And coincidentally, your friend’s house has caught fire and he’s supposed to file a claim with his two separate insurers. Well, what do you think about that? Will both insurers pay you in full? Unfortunately not. And obviously both insurers would refuse to pay more than one claim.

But why is this? Because property insurance (including health and property insurance) is subject to the principle of indemnity (compensation) and contribution, while personal insurance and life insurance are generally not controlled by indemnity contracts and therefore , there is no contribution between insurers.

Just as the indemnity principle prevents an insured from recovering money from both insurers, it also prevents the full recovery of claims from more than one insurer, for the same risk, and must share compensation proportionally.

Now, what are the principle of indemnity and contribution and its exact role in the judicious determination of a claim? As you know, all insurance policies except life insurance and personal insurance policies are indemnity contracts, the main purpose of having these provisions is to place the insured or policyholder in almost the same financial position (as they were before of the accident). ) after suffering a loss. Otherwise, it would be contrary to public order to allow an insured to benefit from the occurrence of loss/damage. And there would be a tendency to get overinsured.

Similarly, contribution is defined as the right of the insurer to require other interested insurers to contribute, equitably or proportionally, for the same loss and the contribution doctrine supports the principle of indemnity or principle of equity. in common law. While there is no contribution (according to the contract) in case of personal accidents and life insurance policies.