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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Double insurance exists when the same person is insured by several insurers separately in respect to the same subject and interest. (Sec. 95, Amended Insurance Code of the Philippines)
There is over insurance if the insured takes out an insurance over the property insured in an amount which is in excess of the value of his insurable interest. (Aquino, Essentials of Insurance, 2018, p. 283)
Double Insurance
Double insurance exists when the same person is insured by several insurers separately in respect to the same subject and interest. (Sec. 95, Amended Insurance Code of the Philippines)
The requisites in order for double insurance to arise are as follows:
- The person insured is the same;
- Two or more insurers insuring separately;
- There is identity of subject matter;
- There is identity of interest insured; and
- There is identity of the risk or peril insured against.
Is double insurance prohibited?
As a general rule, double insurance is NOT prohibited by law, except:
- if it is prohibited under an “other insurance clause”; or
- if there is over-insurance.
Over Insurance
There is over insurance if the insured takes out an insurance over the property insured in an amount which is in excess of the value of his insurable interest. (Aquino, Essentials of Insurance, 2018, p. 283)
NOTE: Over Insurance can happen either by only one insurer or by double or several insurers.
What is the insured entitled to in case of an over insurance by several insurers other than life?
Section 83 of the Amended Insurance Code provides that in case of an over insurance by several insurers other than life, the insured is entitled to a ratable return of the premium, proportioned to the amount by which the aggregate sum insured in all the policies exceeds the insurable value of the thing at risk.
What are the effects of over insurance by double insurance on the insured in a policy other than life?
Section 96 of the Amended Insurance Code provides that where the insured in a policy other than life is over insured by double insurance:
(a) The insured, unless the policy otherwise provides, may claim payment from the insurers in such order as he may select, up to the amount for which the insurers are severally liable under their respective contracts;
(b) Where the policy under which the insured claims is a valued policy, any sum received by him under any other policy shall be deducted from the value of the policy without regard to the actual value of the subject matter insured;
(c) Where the policy under which the insured claims is an unvalued policy, any sum received by him under any policy shall be deducted against the full insurable value, for any sum received by him under any policy;
(d) Where the insured receives any sum in excess of the valuation in the case of valued policies, or of the insurable value in the case of unvalued policies, he must hold such sum in trust for the insurers, according to their right of contribution among themselves;
(e) Each insurer is bound, as between himself and the other insurers, to contribute ratably to the loss in proportion to the amount for which he is liable under his contract.
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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