Double Insurance

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What constitutes a double insurance – A double insurance exists “where the same person is insured by several insurers separately in respect to the same subject and interest.”[1]

New Life Enterprises v. Court of Appeals
G.R. No. 94071, 31 March 1992

Julian Sy failed to disclose the other insurance policies he obtained from three insurance companies covering the same goods, in all his application with the said companies. When he claimed after fire gutted the goods, he was denied of it for violating Condition No. 3 on non-disclosure by all three insurance companies.

HELD: The three insurance companies were not liable. The terms of the contract are clear and unambiguous. Julian Sy’s failure to disclose placed him in violation of Condition No. 3. Consequently, the contract was avoided.

Where the words and language of documents are clear and plain or readily understandable by an ordinary reader thereof, there is absolutely no room for interpretation or construction anymore.

Rules in double insurance except life policy – Except for life insurance, the following rules will be followed for double insurance:[2]

  • 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;[3]
  • 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;[4]
  • 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;[5]
  • 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;[6]
  • 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.[7]

[1] P.D. 612 (Insurance Code), as amended, Section 95.

[2] Ibid. Section 96.

[3] Ibid. Section 96 (a).

[4] Ibid. Section 96 (b).

[5] Ibid. Section 96 (c).

[6] Ibid. Section 96 (d).

[7] Ibid. Section 96 (e).

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