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Most (UK) insurance policies have a "dual insurance" clause along the following lines:

If any injury, loss, damage or liability is covered by any other insurance then we will not pay more than our proportion.

I understand why (to guard against double recovery), but:

  1. How is "our proportion" calculated? Does it relate to premium paid, sum insured, value of claim?
  2. What happens to the excess amounts - does each insurer pay "their share" less the excess you agreed with them?

Partly I'm just curious, but I do want to understand the implications of dual insurance because when shopping around for deals it isn't always easy to avoid. As an example, imagine that I have home insurance with cover for contents away from the home ("personal possessions cover" or whatever a particular insurer calls it). Then I find a good annual travel insurance deal that includes baggage cover as standard though I don't need it. The travel insurance baggage cover is effective only in specific circumstances (with some UK insurance, travelling abroad or staying away with at least 2 night pre-booked accommodation) so I would want to keep the "contents away from home" cover, but in those specific circumstances I would then be dual insured.

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2 Answers

Usually one insurance policy is considered "primary", and states as much in the insurance certificate. The various insurance parties then coordinate their claims payment processes to ensure that you don't make money on the transaction.

The simplest example is car rental insurance. Most people stick with the freebie credit-card insurance, which is secondary to your normal car insurance policy. So if you crack up the car and hurt someone, your auto insurance will handle personal liability and property damage up to a point. After that point, the credit card company's insurance kicks in.

If you don't own a car or don't want accidents with rental cars affecting your insurance record, you can buy primary insurance directly from the rental company. (typically at a high cost)

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Where there is dual insurance. Be it Travel and Contents All Risk or in the case were two household policies are in force. The settlement is worked out on a pro rata bases depending on the sum insured.

If one buildings sum is 100,000 and the other is 200,000 then one would pay 33.3% and the other 66.6%.

One insurer will take the lead and notify the other insurer and then following settlement apply for their portion. Hope this helps.

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