Double Insurance Clause

Purpose

Double insurance arises where the same interest against the same risk for the same period is covered with more than one insurer and the sums insured together exceed the insurable value. The clause obliges the policyholder to notify all insurers involved without delay and sets out the proportion in which the insurers must account to each other, so that the policyholder gains no unjustified advantage from the multiple cover.

Effect and limits

Externally, the claimant may seek indemnity from any insurer involved, but never more in total than the actual loss (the indemnity principle); internally, the insurers contribute in proportion to their respective sums insured. Where the double insurance was concealed deliberately or arranged fraudulently, the insurers are not bound by the affected contract but retain their premium entitlement.

Negotiation and practice

In international corporate programmes with local policies and a master policy, the distinction from an intentional difference-in-conditions/difference-in-limits (DIC/DIL) structure matters, since the latter is specifically designed not to constitute impermissible double insurance. Brokers therefore actively check for unintended overlaps when amending or restructuring existing programmes and coordinate the affected contracts between the insurers involved.

Jurisdictional comparison

Switzerland has regulated multiple insurance since the 2022 VVG reform in Art. 46b VVG, with its own time-limited right of termination for the policyholder. Germany provides for joint and several liability of the insurers involved under Section 78 VVG. Austria refers to a comparable contribution model in Section 59 VersVG, with its own separate rules on the duty to notify and its breach.