I have been shopping around for home insurance policies for the past month and I like two packages offered by different companies. Each package has attractive points that I think will help me adequately insuring my property. Can I take out two insurance policies for the same property?
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Answer by Neha Sharma, Hillsdale 2036 NSW
- People have the right to use as many insurers as they want and may take out double insurance unless limited by legislation.
- Insurers can require that other insurers are informed of the double insurance.
- Usually multiple insurance policies cover different subjects and different risks but may also have risks that are common.
- For double insurance to take place each policy must:
- be held by the same policy holder (the insured);
- cover the same risk; and
- be legally valid insurance contracts.
- If a double insurance policy is in place a policy holder may not double claim.
- This means that they cannot be paid more than once for the same damage.
- Under the law over compensating is not permissible.
- For example if you have insured your home for $500,000 with two insurance companies and your house burns down in a fire incident you may claim:
- $300,000 from one company; and
- $200,000 from the other company.
- You cannot claim an amount from both companies that will exceed the total loss you have suffered.
- Having double insurance can become complicated when processing an insurance claim and it is advisable to take out adequate insurance from one company to cover the risk as this will also reduce your premium costs.