Can You Claim Two Car Insurance Policies for Full Damage Coverage in India?
When it comes to car insurance in India, many drivers wonder if it's possible to hold two insurance policies to fully cover damage in the event of an accident. While it might seem like a plausible solution, there are several factors to consider. This article will delve into the intricacies of car insurance and explain why claiming two policies to get full damage coverage is generally not advisable.
Understanding the Indemnity Principle
The principle of indemnity is a fundamental concept in insurance that ensures the insured party is compensated for the actual loss suffered. This principle stipulates that the insurance compensation should not exceed the actual loss or damage incurred. For instance, if a damage claim amounts to Rs. 50,000, no insurer will pay more than that amount, regardless of how many policies the insured holds.
The Consequences of Double Insurance
When it comes to double insurance or multiple insurance policies for the same vehicle, each insurer is liable to contribute a share of the loss according to their respective policy terms and conditions. In the event of a claim, the insurers will each pay a portion of the total damage assessed based on the proportional limit set in their policies.
For example, let us consider the case of Kavya's vehicle. If Kavya took out two insurance policies for an identical sum insured and an accident resulted in Rs. 50,000 in damages, each insurer would pay Rs. 25,000. This is because the principle of contribution requires each insurer to contribute a share of the total loss.
Why Having Two Policies Is Unadvisable?
While it is technically possible to have more than one insurance policy for a single vehicle, it is not advisable for several reasons:
Cost Consideration: Taking multiple policies often results in higher premiums. Each insurer will charge for the coverage they provide, leading to increased expenses. Redundancy: Holding multiple policies for the same vehicle can lead to redundancy. The insurance cover from one policy may overlap, leading to double or even triple claims settlement. Complexities in Claims: Managing multiple policies can become cumbersome. Keeping track of different policy limits, deductibles, and claim processes can be time-consuming and may lead to mishandled claims. Liability Issues: If multiple insurers pay out claims, it can lead to legal complications and disputes over the distribution of funds. This can complicate the claims process significantly. Potential for Misuse: Taking out two policies with different insurers can be seen as an attempt to manipulate the system, which is unethical and can lead to legal repercussions.The Principle of Contribution
Under the principle of contribution, when a loss occurs, the total compensation from all insurers cannot exceed the actual loss. Each insurer, regardless of the number of policies, will pay a share of the loss based on the coverage they provide and the proportional limit of their policies.
For example, if a vehicle is insured with two policies and an accident results in Rs. 50,000 in damages, each insurer will contribute 50% of the loss if they have identical coverage limits. This approach ensures that the total compensation does not exceed the actual amount of damage.
Conclusion
In conclusion, while it may seem tempting to take out two car insurance policies to ensure full coverage in the event of an accident, this approach is generally not advisable due to the principles of indemnity and contribution. Each insurer will contribute a proportional share of the loss, and the total compensation cannot exceed the actual damage incurred. Instead, it is advisable to carefully review your policy terms and consider the coverage limits and additional benefits provided by each insurance company to find the most suitable policy for your needs.