What Is Double Insurance?

Double insurance refers to insurance in which the applicant has entered into several insurance contracts with two or more insurers for the same insurance subject, the same insurance interest, and the same insured event. Double insurance often causes the total amount of insurance to exceed the actual value of the subject-matter insured. Double insurance does not require the policy to cover exactly the same benefits, dangers or periods. As long as there is overlap between policies, it is double insurance. There were also films of the same name starring Fred McMurray and Barbara Steinwick in 1944.

Double insurance

(Noun definition)

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Double insurance means that the insured applies the same insurance subject, the same insurance interest, and the same insurance accident to two or more

Double insurance is also called reinsurance, and its specific connotation has different definitions in terms of science and legislation. Some define double insurance as:

1. Overlap in insurance liability period

Overlap during the period of double insurance includes full overlap and partial overlap. All overlap means that the insurance liability starts and ends at exactly the same time, also known as simultaneous reinsurance. Partial overlap means that the start and end times of insurance liabilities are not exactly the same, but there are some parts that are the same, which is also called "alternate reinsurance". "However, the beginning and end of the insurance period are not necessarily the same. If there is only a period of repetition, the insurance contract will still be reinstated during the repetition period."

Under double insurance, insurers who have suffered losses must make allocations in three ways:

(1) Proportional liability system, which is to share the liability for loss compensation in proportion to the amount of insurance of each insurance company. The formula is:

Liability of an insurer = (insurance amount of an insurer / total insurance amount of all insurers) × loss amount

(2) Limitation of liability system, that is, the sharing of losses by various insurance companies is not based on the amount of insurance coverage, but according to the proportion of limits they are responsible for without insurance. Its formula is:

Limitation of liability of an insurer = (independent liability limit of an insurer / sum of independent liability of all insurers) × loss

For example, A and B insured the same property, insurer A insured 20,000 yuan, and insurer B insured 80,000 yuan. If a loss of 40,000 yuan occurs, A will pay 20,000 yuan without other insurance, and B will pay 40,000 yuan without other insurance, then: A's compensation = 2/6 * 4 = 4/3 million, B will pay = 4/6 * 4 = 8/3 million

(3) Sequential responsibility system, that is, the earliest issue when two or more insurance companies underwrite the same insurance subject

There are various motivations for policyholders to carry out double insurance. Some are to obtain improper benefits and some are to increase security. Legislation should make different provisions for these different situations. Therefore, according to the subjective status of the policyholder, it is of practical significance to divide the double insurance into a good double insurance and a malicious double insurance.

(I) Definition of good faith reinsurance and malicious reinsurance

Reinsurance in good faith refers to double insurance that the policyholder does not intend to obtain excess insurance compensation, and aims to increase safety, improve the ability to prevent a certain danger, and reduce losses.

Malicious reinsurance refers to the double insurance that the policyholder intends to take to obtain excess insurance compensation.

(2) Determination of good faith reinsurance and malicious reinsurance

Regarding whether double insurance is in good faith or malicious, most legislative legislation determines whether the insured person has fulfilled the notification obligation when insured. If the notification obligation is fulfilled, the dual insurance is deemed to be double insurance in good faith, and vice versa. Some legislative regulations provide that the subject performing the notification obligation is the insured. Article 1002 of the Macau Commercial Code provides that if the insured fails to give notice in bad faith, all insurers will not be liable for compensation. This is mainly due to the significant legal status of the insured and the insurer in the common law system, and the prominent legal status of the insured and the insurer in China's "Insurance Law." The subjects are different. However, regardless of the information asymmetry between the policyholder and the insurer, and between the policyholder and the insured, it is not appropriate to make a general definition of the notification obligation without distinguishing whether double insurance is excessive.

As insurance is a highly professional business activity, most of the insured or insured are not aware of the legal consequences of their actions. Therefore, whether the insured or insured fulfilled the notification obligation was deemed to be subjectively goodwill. Or malicious standards, which further increases their obligations and puts the insured at a more disadvantaged position, which may result in the interests of the insured not being effectively protected. The insurance laws of developed countries gradually improve the provisions that are not conducive to the insured or beneficiaries, highlight the position of protecting the insured, and cancel the notification obligation of the insured's double insurance. Even if it is stipulated, the applicable conditions are strictly limited. The insurer is a highly specialized business entity. During the signing of the insurance contract, the insurer should assume the pre-obligation, that is, when signing the insurance contract, the insurer should actively ask the policyholder and the insured whether there is double insurance and The meaning of double insurance and the legal consequences of false statements shall be explained. Under this premise, the insured or insured should fulfill the notification obligation. If there is a time lag between the signing of the double insurance contract, the insured or the insured shall perform the notification obligation to each insurer.

For double insurance with different policyholders and no information communication between each other, the law should stipulate that the insured is the legal subject of the notification obligation; if the insured fails to perform the notification obligation due to lack of knowledge, the dual insurance should be deemed to be a double insurance in good faith Each insurer assumes insurance liability.

In addition to the subject of the insurer's pre-obligation and notification obligation, the law should also specify the content of the notification of dual insurance, to make the content of the notification obligation of the insured or the insured clearer, and to avoid Defects affect the effectiveness of insurance contracts. For example, the "Insurance Law" in Taiwan requires the insurer to notify other insurers of the names and amounts of insurance. In excess double insurance, if the subject of the notification obligation truthfully answers the insurer's written inquiry on the double insurance, it will be deemed to have fulfilled the notification obligation. The double insurance is a double insurance in good faith, unless the insured or the insured is unaware, For malicious double insurance, each insurer does not assume insurance liability, as stipulated in Article 37 of Taiwan's Insurance Law.

In addition, the notification obligation of the insured or insured does not apply to non-excess double insurance. For non-excessive double insurance, each insurer only covers part of the value of the subject matter of the insurance. The insured does not seek improper benefits, and subjectively there is no malicious intention. Therefore, non-excessive double insurance is a goodwill double insurance.