# Double insurance coverage: did things change since the 80's? **URL:** \ **Category:** Factual Questions\ **Created:** [April 17, 2019, 2:17pm UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676 "2019-04-17T14:17:54Z")\ **Posts on this page:** 15\ **Page:** 2
**Author:** ![Paxx](https://avatars.discourse-cdn.com/v4/letter/p/50afbb/32.png) [@Paxx](https://boards.straightdope.com/u/Paxx)\ **Post date:** [April 18, 2019, 8:14am UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/21 "2019-04-18T08:14:57Z")
> [@BwanaBob](#): > > 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. ---
**Author:** ![nightshadea](https://avatars.discourse-cdn.com/v4/letter/n/7ba0ec/32.png) [@nightshadea](https://boards.straightdope.com/u/nightshadea)\ **Post date:** [April 18, 2019, 8:41am UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/22 "2019-04-18T08:41:38Z")
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 … ---
**Author:** ![Dereknocue67](https://avatars.discourse-cdn.com/v4/letter/d/6de8d8/32.png) [@Dereknocue67](https://boards.straightdope.com/u/Dereknocue67)\ **Post date:** [April 18, 2019, 8:43am UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/23 "2019-04-18T08:43:25Z")
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. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [April 18, 2019, 11:24am UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/24 "2019-04-18T11:24:38Z")
> [@Slash1972](#): > > 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. ---
**Author:** ![Paxx](https://avatars.discourse-cdn.com/v4/letter/p/50afbb/32.png) [@Paxx](https://boards.straightdope.com/u/Paxx)\ **Post date:** [April 18, 2019, 11:55am UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/25 "2019-04-18T11:55:54Z")
> [@Dereknocue67](#): > > 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. ---
**Author:** ![BwanaBob](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bwanabob/32/2985_2.png) [@BwanaBob](https://boards.straightdope.com/u/BwanaBob)\ **Post date:** [April 18, 2019, 12:55pm UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/26 "2019-04-18T12:55:33Z")
> [@Paxx](#): > > 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. ---
**Author:** ![SamuelA](https://avatars.discourse-cdn.com/v4/letter/s/c77e96/32.png) [@SamuelA](https://boards.straightdope.com/u/SamuelA)\ **Post date:** [April 18, 2019, 1:26pm UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/27 "2019-04-18T13:26:07Z")
> [@Mama\_Zappa](#): > > 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. ---
**Author:** ![Mdcastle](https://avatars.discourse-cdn.com/v4/letter/m/958977/32.png) [@Mdcastle](https://boards.straightdope.com/u/Mdcastle)\ **Post date:** [April 18, 2019, 1:30pm UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/28 "2019-04-18T13:30:17Z")
> [@Mama\_Zappa](#): > > 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. > [@](#): > > 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. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [April 18, 2019, 2:24pm UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/29 "2019-04-18T14:24:37Z")
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. ---
**Author:** ![Dereknocue67](https://avatars.discourse-cdn.com/v4/letter/d/6de8d8/32.png) [@Dereknocue67](https://boards.straightdope.com/u/Dereknocue67)\ **Post date:** [April 19, 2019, 7:59am UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/30 "2019-04-19T07:59:32Z")
> [@BwanaBob](#): > > 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. ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [April 19, 2019, 8:34am UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/31 "2019-04-19T08:34:39Z")
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: > [@](#): > > 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. > > [What Are the Six Principles of Insurance? | Finance - Zacks](https://finance.zacks.com/six-principles-insurance-9383.html) ---
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [April 19, 2019, 4:02pm UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/32 "2019-04-19T16:02:38Z")
> [@BwanaBob](#): > > 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. ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [May 1, 2019, 3:39am UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/33 "2019-05-01T03:39:55Z")
> [@md2000](#): > > Y… > (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)… > 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. On the “patient on the hook”: here in Murrika, there’s the concept of “usual and customary”, and also “in network”. If the insurance company determines that a procedure ought to cost 1,000 dollars, and you go with a provider who charges 1,300, the insurer will pay their share (say, 80%) of the thousand, and you pay the difference - or 500 in this case. Most coverage nowadays has the concept of “in network”, where they have providers who agree to work with them, and discount their rates somewhat. If you go to an in-network provider, you pay your share of that discounted rate. Again using that thousand dollar rate, the insurer might have a negotiated rate of 750 dollars, and pay 80% (or 600) of that. If your provider’s “rack rate” is a thousand (for a cash-paying customer), the provider gets 750 dollars for you (600 from insurance, 150 from you), and 1,000 from the next guy who isn’t covered by insurance. If you go to the spendier provider, who charges 1,300, your insurance either pays _nothing_ (some plans nowadays pay _nothing_ for out of network), or they may pay 600 (their 80% of what the in-network provider would have charged). Either way you’re out a lot of money, and sometimes you don’t know the provider is out of network until after the service has been rendered (e.g. an anesthesiologist). On the “insurance payments when someone was off sick were a rip-off”: Not sure what you mean by insurance payments here. In any case: someone who’s out on worker’s compensation would get that income, and likely nothing else. And that income is likely _less_ than their regular salary. As far as coverage for mortgage payments etc, that’s extremely rare, unless you opt for some private coverage to handle that scenario. It exists, but it’s not common. Basically you’d be expected to cover the mortgage etc. from your disability income. All in all, it would be VERY rare for someone to have better cash flow while disabled than while able to work full-time. Not saying it doesn’t ever happen, but it’s NOT the norm. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [May 1, 2019, 5:51pm UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/34 "2019-05-01T17:51:03Z")
> [@Mama\_Zappa](#): > > … > > On the “insurance payments when someone was off sick were a rip-off”: Not sure what you mean by insurance payments here. In any case: someone who’s out on worker’s compensation would get that income, and likely nothing else. And that income is likely _less_ than their regular salary. As far as coverage for mortgage payments etc, that’s extremely rare, unless you opt for some private coverage to handle that scenario. It exists, but it’s not common. Basically you’d be expected to cover the mortgage etc. from your disability income. > > All in all, it would be VERY rare for someone to have better cash flow while disabled than while able to work full-time. Not saying it doesn’t ever happen, but it’s NOT the norm. It is quite common in Canada (or used to be) to offer job-loss coverage, sickness coverage and death coverage on things like mortgages and car loans. Credit cards still offer (I think) “we will pay the minimum balance due”… If you are hospitalized or off sick (legitimate documentation) for a while (i.e. 2 weeks or more continuous) then any payments due during that time were covered by insurance. These specifically did not take into account Workers’ Compensation or Unemployment Insurance, as I recall, due to the logic that these were less than your full pay. However, If your mortgage and car payment are covered, and Workers Comp was tax free (in our province back then) it was easily possible to have time off while having more disposable income than while working. the company I worked for recognized this and instituted a program to find easy work for people who were recuperating. One fellow was given the job of painting safety railings; when he said he could not lift the 5-gal paint pail, someone was designated to move the pail for him so he had no excuse not to come back to work - which ticked him off because he now lost the free loan payments. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [May 1, 2019, 6:06pm UTC](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676/35 "2019-05-01T18:06:43Z")
> [@md2000](#): > > It is quite common in Canada (or used to be) to offer job-loss coverage, sickness coverage and death coverage on things like mortgages and car loans. Credit cards still offer (I think) “we will pay the minimum balance due”… It’s not unheard of in the US although it’s not common either. I have never, ever bought the policies that will pay my car loan, mortgage, credit cards ,etc if I was disabled or lost my job\* - but I have had jobs where disability insurance paid regardless of whether I was also collecting sick leave ( which was full pay ) or workers comp. The job I had when my kids were born- almost every woman who gave birth was getting their regular pay plus disability payments for 8-10 weeks. Those who didn’t get both for the full time didn’t have 8-10 weeks of leave on the books- everyone got the disability. - Although they do exist and someone must buy them. [Previous page](https://boards.straightdope.com/t/double-insurance-coverage-did-things-change-since-the-80s/832676.md?page=1)