Contribution policy aims to distribute the actual amount of claim among the different insurers who are liable for the coverage under different policies in respect of the same cause, incident or subject matter. Any one insurer may pay to the insured the full amount covered by the policy and then become entitled to contribution from the other joint insurers in proportion to the amount which each has undertaken to reimburse in case of a claim by the insured. Thus, contribution is the right of the insurer to call upon other co-insurers liable to the same insured party to share the cost of an indemnity payment. There are a few factors on which the principle of contribution is based such as:
(a) The policies must cover the same interest. It is not necessary for the policies to be exactly similar. There should, however, be a commonality in such a manner that all the policies are liable for payment of the claim.
(b) The policies must cover a common subject matter.
(c) Two or more policies of indemnity must exist.
(d) The policies must cover a common peril which gives rise to the loss.
(e) Each policy must be liable for loss.
Contribution is usually calculated on the basis of direct proportion. This means each insurer contributes towards paying the claim in proportion to the sums insured on the policies. Thus, in this case where the total claim is Rs 2.5 lakh, Iffco Tokio, Metlife and ICICI will have to pay Rs 1.33 lakh, Rs 0.33 lakh and Rs 0.83 lakh respectively. Ideally, one should share the information about existing possession of mediclaim policies while buying another one from a different insurance company. This will enable you to apply the principal of contribution in case of any unforeseen health-related incident.
One question that comes to mind in the context of the contribution clause is whether it makes sense to have more than one health policy. While, legally speaking, there’s nothing wrong in having more than one health cover, the individual would only be over-insuring himself. Moreover, if the reason for having more than one policy is to cover a longer list of illnesses, then it’s better to buy insurance from an insurer who insures the maximum number of illnesses. Buying from more than one insurer could present issues at a later date. For starters, you will be shelling out more money. Secondly, if you forget to disclose anything and the same comes to light later, you would be held guilty of suppressing important facts.
« Start ‹ Prev |
12 |
Next › End »