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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
- Over-insurance, on the other hand, is when the insured takes out an insurance over the property insured in an amount which is in excess of the value of his insurable interest.
- Over insurance by double insurance exists when there are two or more policies on the same adventure and interest or any part of it, and the sums insured exceed the insurable interest value in the case of an unvalued policy or the value fixed by the policy in the case of an unvalued policy or the value fixed by the policy in the case of a valued policy.
A double insurance exists where the same person is insured by several insurers separately in respect of the same subject and interest. (Armando Geagonia vs. Court of Appeals, G.R. No. 114427 February 6, 1995)
Over-insurance, on the other hand, is when the insured takes out an insurance over the property insured in an amount which is in excess of the value of his insurable interest.
When is there an over-insurance by double insurance?
Over insurance by double insurance exists when there are two or more policies on the same adventure and interest or any part of it, and the sums insured exceed the insurable interest value in the case of an unvalued policy or the value fixed by the policy in the case of an unvalued policy or the value fixed by the policy in the case of a valued policy.
What are the rules on payment when the insured, in a policy other than life, is over-insured by double insurance?
The law says:
Section 96. 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. (Section 96, Republic Act No. 10607, also known as The Insurance Code)
What is the nature of the liability of the several insurers in double insurance?
The law says:
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. (Section 96(e), R.A. No. 10607)
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