Multiple insurance and coinsurance. Similarities and differences

Multiple insurance and coinsurance are situations in which several similar insurance policies from different insurers cover the same interest during the same term or, in other words, and for our understanding, they cover “the same during the same period of weather”.

To establish that we are facing a multiple insurance case and/or a coinsurance, it must be previously confirmed that there are a series of requirements that must be given cumulatively:

• There must be a plurality of insurance policies formalized with different insurance entities.
• Said contracts (policies) must cover the same materializable risk on the same insured interest. This excludes cases in which the policies cover the same risk on different interests, as well as those in which different risks are covered on the same insured interest.
• The term or period of coverage must overlap. This overlap can be total or partial. If it is partial, we will only find ourselves in this situation during the period in which both insurances concur.
• And finally, the responsibility of both insurers in the event of a claim must be simultaneous, not subsidiary.

Notwithstanding the foregoing, a multiple insurance scenario (also known as cumulative insurance) and a coinsurance scenario are not the same. The main difference between the two institutions lies in who takes the initiative for this to happen. As they are different figures, they receive a differentiated treatment for the Insurance Contract Law about the applicable legal regime in each of the situations that we have indicated.

The art. 32 of the Insurance Contract Law regulates the figure of cumulative insurance or multiple insurances, requiring that the initiative when this situation occurs be borne by the policyholder. It is as follows: “When in two or more contracts stipulated by the same policyholder with different insurers the effects that the same risk can produce on the same interest are covered and during the same period the policyholder or the insured must unless otherwise agreed, notify each insurer of the other insurances that it stipulates. If by fraud this communication is omitted, and in the event of over insurance the loss occurs, the insurers are not obliged to pay the compensation. “

A duty of communication to the insurance entities is established by the injured party. The purpose of this duty of communication is that both entities (it can also be more than two) know the concurrence at the time of ensuring the interest or good in question. The legal consequence of the omission, if it is fraudulent, is clear: the policyholder will not receive any compensation in the event of a claim, since the competing insurers will refuse by what is stated in the previous paragraph.

Coinsurance situations are regulated separately, specifically in art. 33 of the Insurance Contract Law. In these cases, several insurance entities come together to cover the same risk, as long as there is a prior agreement with the policyholder (or insurance, in this case). In most of the courses, this is for technical reasons. Article 33 of the Law regulates the co-insurance situation as follows: “When using one or more insurance contracts, referring to the same interest, risk and time, there is a distribution of certain quotas between several insurers, a prior agreement between them and the policyholder, each insurer is obliged, unless otherwise agreed, to pay off the indemnification only in proportion to the respective quota. “.

The communication duty required in multiple insurance situations does not apply to coinsurance situations, since, in this case, the different insurers are perfectly aware of their concurrence and the quota concerning which each one has to respond in the case of Sinister.

The question that arises in these cases, in most cases, is related to the payment of compensation. The fact that a person has contracted several insurances, can it lead to double or, if hurried, triple the compensation received for the damage suffered?

The answer to this question should, as a rule, be negative. The usual thing is the proportional distribution of the payment of the compensation since the Law itself always ensures that the settlement of the claim does not exceed the damage suffered in the property or interest insured. As we already know, the principle of comprehensive compensation for damage is limited to unjust enrichment. This is collected in art. 26 of the aforementioned Law.

Notwithstanding the foregoing, what the insured is empowered to do is to request from any of the competing insurers the total compensation that corresponds to him (always by the limits established by the policy). In such cases, it would already be the entities themselves that would distribute the corresponding quota among themselves based on art. 43 of the Law.