Subsidiarity Principle (Subsidiaritätsprinzip)
The subsidiarity principle provides that an insurer is only secondarily liable for a loss if and to the extent that no other, primarily responsible insurance covers the same loss.
Concept
The subsidiarity principle provides that an insurer is only secondarily liable for a loss to the extent that another insurance, which has primary responsibility for the same loss, provides no cover or insufficient cover. It regularly applies where a risk could be covered by several different insurance contracts or lines of business.
Distinction from Double Insurance
Whereas under classic double insurance several insurers of equal rank jointly bear the same loss in proportion to their respective sums insured, an agreed subsidiarity clause means that the secondarily liable insurer can only be called upon once the primarily responsible insurer has provided its benefit in full, or cover by that insurer is excluded.
Typical Applications
Subsidiarity clauses are frequently found in supplementary insurance policies, for example in private accident insurance in relation to an existing statutory accident insurance scheme, or in travel insurance in relation to an existing private health insurance policy; the clause is intended to prevent the policyholder from being over-indemnified for a loss, beyond actual need, through the cumulative use of several insurance policies.