Title 11 : Double Insurance

• Sec. 95 A double insurance exists where the same person is insured by several
insurers separately in respect to the same subject and interest.

- Interchangeably used with the terms:

- additional insurance

other insurance

co-insurance (also known as such since there are 2 or more insurers)

Requisites of double insurance:

• 1.) The person insured is the same
• 2.) There are 2 or more insurers insuring separately
• 3.) There is identity of subject matter
• 4.) There is identity of interest insured
• 5.) There is identity of risk or peril insured against

Examples:

Existent Double insurance

• X insures
• with Y and Z Co.
• His house
• Over which he has an insurable interest
• And insurance is against the risk or peril of fire.
Non existent Double Insurance
1.) X mortgages his house to B
- both X and B
- Insures the same house
- But they don’t have similar insurable interest.

2.) X insures
o With Y Company and Z Co.
o His automobile
o Against different risks namely: fire and theft, respectively.
Distinction:
Double insurance
1.) when the sum total of the amounts of the policies issued does not exceed the
insurable interest of the insured.
2.) there are always several insurers

Over-Insurance

1.) when the amount of the insurance is beyond the value of the insured's insurable interest

2.) there maybe only one insurer involved

Examples:
1.) Over insurance without double insurance:
INSURABLE INTEREST – Php 1, 000,000
INSURANCE with Y Co.- Php 1, 100,000

2.) Double insurance without over insurance:

INSURABLE INTEREST – Php 1,000,000
INSURANCE with Y Co.- Php 600,000
with Z Co. 400,000

3.) Double insurance with over insurance:

INSURABLE INTEREST – Php 1,000,000
INSURANCE with Y Co.- Php 600,000
with Z Co. 450,000

4.) Neither
INSURABLE INTEREST - Php 1,000,000
INSURANCE with A Co. Php 1,000,000 or an amount lesser

BINDING EFFECT OF STIPULATION AGAINST DOUBLE INSURANCE

Generally, a policy which contains no stipulation against additional insurance is not
invalidated by the procuring of such insurance.
 However, in consonance with Sec .75 policies may expressly stipulate that the violation
of a particular provision although immaterial in the policy, shall avoid it.
As in the case of a fire insurance containing a stipulation or condition that they shall be
avoided if additional insurance is procured on the property without the insurer’s consent.
1.) If additional insurance is obtained by the insured
- This comes in the form of the additional or other insurance clause and is intended to
prevent an increase in moral hazard, thus it is valid and reasonable.
- In the absence of consent, waiver or estoppel on the part of the insurer a
breach thereof will prevent recovery on the policy.
2.) Additional insurance obtained by a third person
- The good or bad faith of the insured usually is immaterial.
- Without his knowledge or consent , any insurance obtained by a third person
will not affect the insured’s right on the policy

- UNLESS there is a ratification.

PURPOSE OF PROHIBITION AGAINST DOUBLE INSURANCE:

1.) Prevent over- insurance
2.) Avert the perpetration of fraud by preventing a loss

to become profitable to the insured

Sec. 96
( rules for payment of claim where there is over insurance
• by double insurance)

Over- insurance by double insurance - when the insurance is contained in

several policies the total amount of which is in excess of the insurable interest

of the insured.

Extent of recovery in a contract of insurance (a contract of indemnity- sec 18)

The insured can only recover no more than the amount of his insurable interest whether
the insurance is contained in one policy or several policies.
The Principle of contribution
 • These rules in Sec. 96 enunciate this principle which requires each insurer to
contribute ratably to the loss or damage considering that several insurances cover
the same subject matter and interest against the same peril.

Where the insured in a policy other than life is over insured by double
insurance: (sec.96)

• 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;

Par. a.) Several or solidary liability of insurers under their respective

contracts
A owns a house valued at Php 180,000
and he insures the same with 3 insurance companies as follows:
X Co Php 60, 000
Y Co Php 180, 000

Z Co Php 240, 000

Order of claim of payment:

1.) based on policy provision – AN EXCEPTION
allowed by law and applies where the policy contains the above mentioned
“contribution clause” which states that the company shall not be liable to pay or
contribute more than its ratable proportion of the loss or damage as provided for in
paragraph e of Sec.96.

2.) insured’s order of selection up to the amount for which each insurer is
liable under the contract
Example:
A. from X Co. up to 60K only amount as specified in the policy.
B. from Z Co. A cant recover more than the value of the insurable interest which is
180k.
 C. from Y Co. only 180k and nothing from the other 2.
D. from each of the three only 60K each

Par. b ) where the insured claims under a valued policy :

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.

Example:
The value of the policy ( without regard for the actual loss) Php 180,000
Less: Amount A recovers from X Co. 60,000
Amount recoverable from either Y or Z Co. or from both of them Php 120,000
not to exceed the amount difference

N.B. Full indemnification by one insurer bars the insured from filing a

subsequent claim with the others.

Par. c ) Where insured claims under an unvalued or open policy:

Where the policy under which the insured claims is an unvalued policy, any sum received by him
under any other policy shall be deducted against the full insurable value, for any sum received by him
under any policy

Steps:

1.) loss value must be ascertained

2.) recover amount of estimated actual loss from insurers in the order of his
selection
3.) amount must be up to that which they are severally liable under their
respective contract.
Example:
Estimated actual loss Php 150,000
A collects from X Co. 30,000
from Y Co. 90,000 120,000
Amount collectible from Z Co. to cover the loss Php 30,000

Par. d ) Where sum received by insured exceeds total insurance taken

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;

Example:
Amount received from X 60,000

Amount received from Y 120,000 180,000

Amount received from Z 144,000
Php 144,000 Is in excess of insurable interest, thus to be held in trust for the insurers
and returned as follows:
X 1/8 of 144,000 Php 18,000
Y 3/8 of 144,000 54,000

Z 4/8 of 144,000 72,000

Recoverable amount from each other:

X Co. 60 k amount paid to A
- 18k amount returned by A
42k
- 1.5k due from Y
40,5K
- 18K due from Z
22.5k pro rata contribution
 Y Co. 120k amount paid to A
- 54k to be returned by A
66K
+ 1.5K amount due to X Co.
67.5k pro rata contribution

Z Co. 144k amount paid to A

- 72k amount to be returned by A
72k
+ 18K amount due to X
90K pro rata contribution

Par. e) Liability of each insurer to contribute ratably to the loss

• 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.
• This governs the liability of the insurers among themselves where the total
insurance taken exceeds the loss.

Formula: Ratable proportion to the loss

INSURER Amount of policy

LIABILTY = Total insurance taken X loss

X Co. = 60k or 1/8 of 180k or P 22,500

480k
Y Co. = 180k or 3/8 of 180k or 67,500
480k
Z Co. = 240k or 4/8 of 180k or 90,000
480k
Total recoverable amount P 180,000

Par E applied to par A (with selection)

A collects from Y Co. Php 180,000
Y Co. can recover from
X Co. Php 22, 500
and from Z Co. 90, 000 112,500
Y Co. pro rata share Php 67,500
If the the loss is greater than the sum total of all the policies issued,

each insurer is liable for the amount of his policy.

Example:
• X Co. Just 60k
• Y CO. 180K
• Z Co. 240k