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Old 04-17-2019, 09:17 AM
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Double insurance coverage: did things change since the 80's?


Back in the day, I worked for an educational institute where we had 2 medical insurances.
One was provided by the institute (employee paid premiums) and one through an employee union (union member paid premiums).

So if I went to my doctor with pneumonia, I submitted my claim to both insurances. I did not pay a cent out of pocket. I was paying two premiums and expected and got double coverage.

Today it seems like I cannot do this. My wife and I pay two premiums because we both have medical coverage at our respective jobs. Why is it anyone's business that we have double coverage? Why is one now a primary and the other a secondary? Sounds like this gets the secondary off the hook for full payment even though they get full premiums.

Extrapolating this, if I'm willing to pay 10 premiums, why can't I have 10 coverages and actually make money if I make a claim?

What am I missing? Did the lobbyists get things changed?

Note: I should add that we are paying 2 premiums for family plans, not individual coverages.
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Last edited by BwanaBob; 04-17-2019 at 09:19 AM.
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Old 04-17-2019, 10:02 AM
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OP here: I might add the inconsistency of this policy. If you have two separate life insurances policies and you die, both pay in full, one doesn't get to say "oh your family was paid already for your death by company A, we'll give you a fraction of your policy value". So why should medical (or dental) insurance be different?
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Last edited by BwanaBob; 04-17-2019 at 10:02 AM.
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Old 04-17-2019, 10:37 AM
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Today it seems like I cannot do this. My wife and I pay two premiums because we both have medical coverage at our respective jobs. Why is it anyone's business that we have double coverage? Why is one now a primary and the other a secondary? Sounds like this gets the secondary off the hook for full payment even though they get full premiums.

Extrapolating this, if I'm willing to pay 10 premiums, why can't I have 10 coverages and actually make money if I make a claim?
How would you make money? Doesn't the money just go to the doctor?

Also, why are you paying two premiums? Why don't just one of you pay for the family option?
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Old 04-17-2019, 11:05 AM
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Also, why are you paying two premiums? Why don't just one of you pay for the family option?
I think that's the question, sometime between the 80's and now, having double coverage went from being awesome to being a waste of money. How and why was this possible?

Last edited by sitchensis; 04-17-2019 at 11:05 AM.
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Old 04-17-2019, 11:30 AM
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I think that's the question, sometime between the 80's and now, having double coverage went from being awesome to being a waste of money. How and why was this possible?
It's possible because there's no law against it. As employers sought to reduce their costs, they agreed to policies with "coordination of benefits" clauses in them and soon they became the norm.

If you want to make a profit on your hospital stay, sign up for AFLAC (the one with the duck).
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Old 04-17-2019, 11:46 AM
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I think that's the question, sometime between the 80's and now, having double coverage went from being awesome to being a waste of money. How and why was this possible?
So before that, the doctor got paid from BOTH insurance companies?
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Old 04-17-2019, 12:03 PM
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So before that, the doctor got paid from BOTH insurance companies?
Or you paid the doctor, and got reimbursed by both insurance companies, which is probably how the "free money" aspect comes up.
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Old 04-17-2019, 12:16 PM
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So before that, the doctor got paid from BOTH insurance companies?
If I remember right, they chose the primary insurance based on month of birth. The primary paid until they hit their limit. Then the secondary paid off the remainder of the bill. You pretty much never had to pay out of pocket.
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Old 04-17-2019, 12:40 PM
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Or you paid the doctor, and got reimbursed by both insurance companies, which is probably how the "free money" aspect comes up.
That's right.

There was a time when there were no networks or preferred providers or anything like that. Your doctor did not get involved with your insurance. The doctor sent you an honest bill -- not the inflated fictional bill they send today -- and if you had insurance, you filled out a form and sent it with the bill to the insurance. You paid the doctor and the insurance paid you back whatever you were covered for. Simple times.
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Old 04-17-2019, 12:49 PM
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So the second insurance company would reimburse you for a bill that was already paid by another insurance company?
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Old 04-17-2019, 01:32 PM
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Also, why are you paying two premiums? Why don't just one of you pay for the family option?
My employee insurance will not accept a spouse if s/he has insurance, or if their employer provides insurance.
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Old 04-17-2019, 01:37 PM
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So the second insurance company would reimburse you for a bill that was already paid by another insurance company?
If you don't tell them about the other insurance company...
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Old 04-17-2019, 01:38 PM
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Not sure about the land of the "Free" and home of the Brave. here in Canada, major medical is covered by Universal Health Care, no money out of pocket. My wife and I both have insurance benefits through our employer - covers things like prescriptions, glasses, dental, chiropractic, massage therapy, orthotics, etc.

The way it works if you both have coverage; for each of you, your employer's insurer is primary. The insurer will pay whatever they cover - say 80% of the cost of prescription or chiropractor, up to an annual maximum. Whatever the primary insurer did not cover, the secondary (spouse's benefit) covers up to max 80% of total cost-i.e. the next 20%. As a result, things like dental end up being zero out-of-pocket even though each policy only covers a fraction. Some practitioners direct-bill, others make you pay and you submit the receipts (first to primary, then to secondary with proof/receipt that primary has paid their share.)

At no time do you come out ahead with extra cash; and all benefits submissions ask "is this covered by any other plan? How much did they pay?" and consider any patient's coverage to be primary and spousal policy to be secondary. Presumably the big insurance companies compare details to catch people trying to game the system.
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Old 04-17-2019, 01:51 PM
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I suppose the other fun question you have to ask - if I have a $2000 annual deductible, does this count toward both policies? Or does the "meter" on the second policy only start counting deductible when the first one's $2000 is fully paid? In which case you may never reach the point of paying both off unless you grossly exceed what the first one covers...

But health insurance essentially says "we will pay the bill". If the resultant bill after the other insurance has paid is $0 then the second insurance does not need to pay anything. If the second policy says "we will pay 80% of the bill", and the secondary says "we will pay up to 80% of the bill minus whatever the other company paid" then the question is - what does the fine print really say? That they won't cover the last 20%? Or they will pay up to the remaining bill or 80% of the total, whatever is less...?

Last edited by md2000; 04-17-2019 at 01:52 PM.
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Old 04-17-2019, 07:14 PM
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OP here. I thought long and hard and remembered that could not make money but I didn't have to pay anything out of pocket after all was said and done. Like I said I had two policies. One paid 80%, no deductible. I would then submit the balance to the other and they covered it entirely. And this made sense, I was paying for two policies; they should have been and were independent.

Now my current situation is actually dental not medical but the concept holds.

Both our jobs had reasonably priced family plans. Unfortunately my wifes policy had a lower annual cap. If we needed any premium service, like a crown, you could get soaked with just one policy. So we opted for double coverage. Problem is that unlike the old days, the second insurer is not paying the balance, only a percentage.

This makes no sense to me.
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Last edited by BwanaBob; 04-17-2019 at 07:15 PM.
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Old 04-17-2019, 08:31 PM
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....
Today it seems like I cannot do this. My wife and I pay two premiums because we both have medical coverage at our respective jobs. Why is it anyone's business that we have double coverage? Why is one now a primary and the other a secondary? Sounds like this gets the secondary off the hook for full payment even though they get full premiums.
....
I don't know just when it all changed, but when the kids were young we too had double insurance. Mine was the better plan (through my work); we kept my husband's coverage on the family as well because it was free. So primary would pay its 80%, and secondary would pay its 80%.... except they'd deduct the amount already paid, so they'd just pay the remaining 20%.

Some time when the kids were past toddler age they changed. Primary would pay 80% (or the negotiated rate or whatever), secondary would say "we'll pay x dollars - oh look, primary already paid that, so screw you!!!". It was extremely rare that secondary covered anything that primary hadn't already covered, so the secondary coverage was a complete waste of money.

Not to mention the hassle of submitting to secondary; we'd have to file with primary, then mail the EOB plus a claim to secondary - who would often bounce it back to us for no more reason than "they felt like it". Especially fun when both insurances were through NY Life (later NYLCare; we took to referring to them as DeNYLCare). The secondary would almost always look at it, say "ooh, this other office is primarhy" and send it to the other location, who would say "Derrr, we already PAID this" and deny it.

It got to the point where I NEVER submitted a claim to secondary without a cover letter explaining exactly what was going and and "please do NOT send it to this other office - as you can see from their EOB, they already did their part".

We do maintain double dental coverage, as both my husband and I tend to have pricey dental work done, and both our insurances have a 2K a year cap. So we'll run out the limit on the 2K, then subsequent claims to primary are of course processed as "we've paid the limit, so we're not paying on this one". We then run those through secondary.
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Old 04-17-2019, 08:34 PM
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If you don't tell them about the other insurance company...
They seem to have ways of finding this out. We will occasionally get notices from insurance asking us to verify that we don't have other coverage. I imagine it would be considered fraud if we submitted the same claim to both and lied about it to get reimbursed more than the bill was for.

But I do think it's scammy that the secondary won't pay anything. They're basically taking your money and refusing to provide the "service" they're paid for (and I use the word "service" in the same way a cattle breeder talks about a bull "servicing" a cow).
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Old 04-17-2019, 08:46 PM
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I'm not sure about the exact mechanics of "double insurance" in the 1980s, but it is generally held to be against public policy to profit off of an insurable loss as it creates a moral hazard.
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Old 04-17-2019, 09:18 PM
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It seems to me(and I could be wrong) that this practice started with medicare in the US. If I'm remembering correctly, there was a minor uproar over medicare starting this as a money saving policy, your private insurance paid first then medicare picked up some percentage of the remainder. I want to say it was supposed to be related to means testing for benefits somehow, but I'm not certain. I failed to find anything directly
related in any of the searches I did
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Old 04-18-2019, 12:27 AM
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When my wife and I were employed we both had insurance at work. The primary paid their share and then the secondary pick up the rest until its limit was reached.
Say a doctor charged $200 for a procedure.
The primary's coverage was $130
The secondary's coverage was also $130.
Primary paid $130 secondary paid $70. The doctor billed the insurance companies and they paid the doctor.

Our last job both employers offered Kaiser. Doctor offices and meds cost to me was $10 per. But where we had dual coverage we paid nothing. And there were other services that cost us nothing, but were listed as having a charge. My CPAP machine $0.00 as an example.
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Old 04-18-2019, 03:14 AM
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So we opted for double coverage. Problem is that unlike the old days, the second insurer is not paying the balance, only a percentage.

This makes no sense to me.
If you were running the insurance company, how would you structure the payout?

In the OP, you say that you and your wife pay two premiums. Is the premium the same for each of you?
What exactly are you paying for? What are the conditions in the policy contract?
Have you contacted your insurance company for clarification?
Have you contacted other insurance companies to find out what they offer?

At some point, it should make sense to you.
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Old 04-18-2019, 03:41 AM
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actually, this is how Californias cal-medi connect works .........

if you have medi-cal (the state low-income medical plan) and medicare you get a one pays for some and the other makes up the difference

or one pays for something the other doesn't .......like Medicare pays for glasses but the state will fix my teeth ......
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Old 04-18-2019, 03:43 AM
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Without getting into actuarial tables or deep into the basic principals of insurance, double coverage is usually only allowed with life insurance because the premium is based on age and amount /type of coverage. Almost without exception, other forms of insurance are based on coverage for the insured's "loss" and the premium reflects this. Once an insured recovers 100% of their loss, the insured has been made whole.

Another reason double coverage payouts are not provided is to prevent fraud. With multiple medical policies, unscrupulous individuals would be tempted to injure themselves/fake an illness in order to make a profit. Same theory apples to property insurance. Imagine a scenario where someone purchases 10 homeowners policies on a single home with limits of $500,000 each. In the event of a total loss, your profit after rebuilding is $4.5 million. That's a strong arson incentive to pay a third party to burn your home.
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Old 04-18-2019, 06:24 AM
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So before that, the doctor got paid from BOTH insurance companies?
When I was a kid and my parents each had coverage- the father's coverage was primary, mother's secondary for the kids. That eventually changed to the coverage belonging to the parent with the earlier birth month was primary. For my parents, each of them m had their own coverage primary and the other secondary. This would have been in the early '80s ( probably before that , too, but I was too young know details). I don't think there was a guarantee that we paid nothing - it may have worked out that way because the doctor simply accepted what the insurance paid. But I'm pretty certain that the first policy paid whatever they paid ( either everything but the copay or a 80% of the "customary cost" ) and the second paid a percentage of that- if the second had "out of network coverage". I don't remember getting any pat of the copay back from the second insurance.



Why they had double coverage? it was practically free. One was fully paid for by the employer and the other was mostly paid for , leaving a minimal amount for my parents to contribute.

Last edited by doreen; 04-18-2019 at 06:25 AM.
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Old 04-18-2019, 06:55 AM
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Without getting into actuarial tables or deep into the basic principals of insurance, double coverage is usually only allowed with life insurance because the premium is based on age and amount /type of coverage.
Even with life insurance there's a limit to the amount of coverage that an insurance company will provide, based on the person's income and other financial factors. Key point: the person should not be worth more dead than alive.

And, as for the OP's question "Why is it anyone's business that we have double coverage?", the answer is that the insurance company is taking on a risk and they want to make sure that they are being paid in proportion to that risk. When the amount of coverage doesn't makes sense, "unusual" events have a way of happening, as Dereknocue67 points out with homeowners insurance. This additional risk can be controlled by asking about other coverage and setting conditions that prevent the payment of double benefits.
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Old 04-18-2019, 07:55 AM
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Even with life insurance there's a limit to the amount of coverage that an insurance company will provide, based on the person's income and other financial factors. Key point: the person should not be worth more dead than alive.

And, as for the OP's question "Why is it anyone's business that we have double coverage?", the answer is that the insurance company is taking on a risk and they want to make sure that they are being paid in proportion to that risk. When the amount of coverage doesn't makes sense, "unusual" events have a way of happening, as Dereknocue67 points out with homeowners insurance. This additional risk can be controlled by asking about other coverage and setting conditions that prevent the payment of double benefits.
How does the insurance company's risk change if I get a second policy? They should base their premiums such that they are satisfied.

I agree with multiple coverages you should not "make a profit', but there's no excuse for double coverages of equal "value" not fully paying the medical/dental charge.

If either company was willing to pay 80% of a charge, then one of them should willingly pay only 20%. I am questioning about the scenario where company 2 won't, even though they would have paid 80% if they were primary.
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Old 04-18-2019, 08:26 AM
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But I do think it's scammy that the secondary won't pay anything. They're basically taking your money and refusing to provide the "service" they're paid for (and I use the word "service" in the same way a cattle breeder talks about a bull "servicing" a cow).
Hey hey hey. Leave bulls out of this, they are doing their job honestly as best they can.

While insurance companies are in a red queen race.

Last edited by SamuelA; 04-18-2019 at 08:26 AM.
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Old 04-18-2019, 08:30 AM
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They seem to have ways of finding this out. We will occasionally get notices from insurance asking us to verify that we don't have other coverage. I imagine it would be considered fraud if we submitted the same claim to both and lied about it to get reimbursed more than the bill was for.

But I do think it's scammy that the secondary won't pay anything. They're basically taking your money and refusing to provide the "service" they're paid for (and I use the word "service" in the same way a cattle breeder talks about a bull "servicing" a cow).
This. I work for an insurance company and eventually some provider will attach an EOB from the primary policy to one of the claims even if the subscriber didn't bother to tell us they have other insurance. What happens is we contact the subscriber to figure out who is primary. If we're primary nothing bad happens but there's going to be an issue when (not if) their secondary finds out. If the primary is supposed to be secondary, they will reject all previously claims back for a period of time (months to years depending on the policy of the individual company) so they can be processed in a proper order. If the subscriber won't respond the insurance company may just start rejecting claims until they do get a response.

Quote:
What am I missing? Did the lobbyists get things changed?
No lobbyists were needed to get things changed. Insurance companies just started writing policies with COB provisions. If one insurance company decided not to, companies buying insurance companies for their employees would buy insurance from a company that did. That's why it took a law to get rid of pre-exist, to not put the first company that did it at a competitive disadvantage for a benefit HR reps insisted on being written into the policies. I've worked in the industry since 2004 and COB has been around as long as any of my coworkers can remember.

Last edited by Mdcastle; 04-18-2019 at 08:31 AM.
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Old 04-18-2019, 09:24 AM
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Yes, insurance is supposed to cover an unplanned expense that they insure against - medical, house burns down, car accident... The only expception would be life insurance because how can you put a value on loss of life?

(I had a dandy argument with an insurance salesman at some social event, because I told him insurance payments when someone was off sick were a rip-off. Someone would be off work for an accident, Workers' Compensation paid a significant part of their lost salary, then mortgage insurance and similar kicked in to pay the loan debts too; some guys were incentivized to miss as much work as they could, because the net income was actually higher)

To me there's a big difference between bureaucratic screw-up ("servicing" up) where they can't figure out who has to pay; vs a deliberate policy - "we said we'd pay 80% of your costs as primary, or whatever balance up to 80% if secondary..." which instead is reworked as "we won't pay any of the 80% that the primary paid". The latter is just service.

Another thing I found was when I ended up paying a lot more than expected for a prescription; I enquired, and the pharmacy across the street from the hospital charged far more than the provincial pharmacy association recommended prices simply because they knew everyone getting out of the hospital would probably stop across the street to get their prescription filled. Just greed. The same with dental - I know Blue Cross pays the percentage of the dental association recommended fee schedule; if the dentist charges more- the patient is on the hook for the difference. Not sure how this applies down there in Americaland.
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Old 04-19-2019, 02:59 AM
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How does the insurance company's risk change if I get a second policy?
It doesn't. Each policy premium is based on the amount of coverage vs life expectancy.
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Old 04-19-2019, 03:34 AM
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Over here I am pretty sure that it has always been a principle of insurance that no one should make a 'profit'. If I write my car off, they will pay me the current value (after negotiation). If I get burgled, I will have to go to some lengths to 'prove' the value of my loss.

Insuring multiple times has been a scam here in the past, before the various insurers caught on. Car owners would arrange to have their cars written off and then claim from each different company. These days, all policies have a clause that says something like "If you have double cover, each respective insurer may only pay their share of a claim." It is possible to have double cover by mistake. Many bank accounts offer free insurance as part of the deal; If you then take out an overlapping policy, there can be delays and hassle while they sort it all out.

Looking for cites, I found these six principles of insurance which seems to cover it:

Quote:
Utmost Good Faith
Utmost good faith, a principle dating back to Carter v. Boehm in 1766, is a principle based on precedent rather than on a set of defining codes or statutes. Utmost good faith requires honesty and full disclosure at all times, starting with the application phase. It prevents both the insured and insurer from concealing or misrepresenting facts during the application phase, prevents the insurer from ever altering the policy without full disclosure during the time the policy is in force and, in the event of a loss, requires the insured to provide a full, honest representation of the facts surrounding the event and loss. Violating this principle can be the basis of a case for fraud.

Principle of Indemnity
The principle of indemnity refers to the payment of money for claims. It says an insured should get no more and no less money than the insurance policy permits and the extent of the loss allows. Provisions in the policy dictate whether claims are valued at cash or replacement value – taking or not taking an allowance for depreciation – or the face value a policy defines for policies that insure valuables such as artwork or antiques. Indemnity does not apply, however, to life insurance policies.

Subrogation Principle
Subrogation is a principle of substitution and recovery. It puts an insurance company in a middleman position when a third party causes a loss and in this way helps to control insurance costs. For example, in the case of an auto accident, subrogation stops an insured from collecting payment from two insurance companies for the same loss, places responsibility for the accident on the third party and gives an insurance company the legal right to demand recovery for any payments made to the insured as a result of the accident.

Contribution Principle
Contribution applies in a case where an insured holds more than one policy for the same thing. It allows insurance companies to share the cost of claims and prevents an insured from collecting in full on more than one policy. The principle of contribution states that an insured can make a claim equal to the extent of a loss from one or all insurers. If one insurer pays the claim in full, the insurer can then recover a percentage of the payment from the other insurers.

Insurable Interest
The principle of insurable interest states that in order for a loss to “count” an insured must have an interest in or own the item being insured. Interest can be subjective, as in life insurance, or it can be a physical thing, such as a car or home. Either way, insurable interest prevents a person from taking out a policy or an insured from making a claim or collecting payments for a person he doesn’t have a direct relationship with or an item he doesn't own.

Proximate Cause
Proximate cause – which does not apply to life insurance – addresses what perils an insured chooses to cover and identifies insurer liability when two or more perils come together to cause a loss. It states that the proximate, closest or most dominant cause determines liability. For example, if an insured has fire but no flood insurance, and a fire causes water pipes to burst and flood the home, the insured is liable for damage the fire causes. However, because bursting water pipes are the dominant cause of the flood damage, the insurance company is not legally liable to pay any claims resulting from repairs.

https://finance.zacks.com/six-princi...ance-9383.html
  #32  
Old 04-19-2019, 11:02 AM
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This makes no sense to me.
Well you should read your policy. Just because you want it to behave a certain way, it may not be what you agreed to with the insurance company. Policy language terms drive what the responsibility between the parties are. Just because it was one way in the 80's means it still is the same.
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