How to update the basics of your claim

Throughout my career, I have frequently encountered some misconceptions among ordinary people, regarding insurance claims, that having insurance against loss or theft or any other insured peril or risk is the only criterion. to receive the full payment of the financial. loss they suffer towards 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 an enthusiast, one of his close friends also bought a couple of homeowners insurance policies to get double the benefits. Now, let’s say that in a car accident, he has broken one of his legs and naturally he has claimed and both insurers have paid him in full.

And coincidentally, your friend’s house has burned down 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 principle of indemnity prevents an insured party from recovering money from both insurers, it also prevents the total recovery of claims from more than one insurer, for the same risk, they must share compensation proportionally.

Now, what are the principle of compensation 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 objective of having these provisions is to place the insured or policyholder in almost the same financial position (that he had before of the accident). ) after suffering a loss. Otherwise, it would be contrary to public policy to allow an insured to benefit from the occurrence of loss/damage. And there would be a tendency to get overinsurance.

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