Understanding Multiple Insurance Types and Coverage
Multiple Insurance and Coinsurance
Sometimes, a borrower enters into various contracts with different insurance companies regarding the same risk. In these cases, we encounter what is known as multiple insurance. If neither the policyholder nor the insured intentionally notifies each insurance company of agreements with others, insurers are not obliged to pay compensation.
Coinsurance is different from overinsurance. Different companies choose to spread the risk associated with a particular transaction, dividing the sum of compensation.
Types of Insurance
- Insurance of things (fire, theft, etc.)
- Insurance heritage (of profits, credit, etc.)
- Personal Insurance (Life, accident, etc.)
Damage Insurance: Fire Insurance
Coverage: All damage caused by fire, fire extinguishing, rescue efforts, etc., are covered. However, damage to bank notes, jewelry, and art objects may be excluded.
Contents: Companies are obliged to compensate for all damage caused by a fire when it originates by chance, through the actions of others, or due to negligence. However, they are not liable for damages caused by malice or gross negligence.
Insurance Against Theft
Coverage: Includes damage caused by the crime in all its forms, whether theft or robbery. The company should compensate when the object is stolen and not found within the time specified in the policy.
Compensation will not be made in these cases:
- Gross negligence of the insured (e.g., leaving keys in the door)
- The insured item is reported stolen from the wrong location
- The theft occurs in connection with claims arising from special risks (e.g., land-related issues)
- The object is retrieved before the deadline stated in the policy.
Insurance of Transport
Security of Land Transport
The insurer undertakes to indemnify, within limits, for damage to property transported, such as damage to the item being transported. This can be per trip or for an estimated time.
Shipping Insurance
Shipping insurance falls outside the Insurance Contracts Act because the seas and oceans are international, and the Code of Commerce and some international standards apply.
Aviation Insurance
Aviation insurance is characterized by the intensity of damage when an incident occurs and by the high value of claims. These circumstances often require coinsurance. Part of aviation insurance is regulated by the Air Navigation Act and international agreements. Aviation insurance adopts the following procedures:
- Aircraft insurance
- Insurance of goods
- Passenger insurance
- Insurance for public liability
Insurance Profits Surface
This is part of insurance equity interest. The subject of the contract rests with the insured’s estate and not on specific assets of the same.
Definition: The insurer is obliged, within the limits, to indemnify the insured for the loss of economic performance that could have been achieved in an event or activity in the absence of the incident described in the contract. If insurance is taken out with another company on the same subject, each of the insurers must be notified of the existence of other insurance.
Insurance Bond
Through this contract, the insurer undertakes to indemnify the insured for financial losses suffered as a result of breaches of legal or contractual obligations by the policyholder.