Mantra Of Multiple Policies

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. [INSERT_1]
(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.
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Then there is the question of still being eligible for the ‘no claim bonus’ for so many policies. According to experts, the impact of ‘no claim bonus’ will be governed by the way the policy is worded. When the insurance policies carry a clause called contribution clause, once a claim is made, all the policies will contribute to that claim and so the ‘no claim bonus’ may not continue. Hence the policyholder will not be entitled to any ‘no claim bonus’ on any of his multiple covers once he makes a claim on any policy. Additionally, multiple health covers can prove inconvenient in actual operation because of the need to deal with several insurers in respect of the same event. Hence, it may be better to choose a single insurance cover that suits the insured’s needs best.
Another question which needs to be addressed when it comes to mediclaim is whether one needs to purchase an additional policy if one is already covered under corporate mediclaim. Experts are of the view that you may not need another policy in addition to your corporate mediclaim. However, if you are looking at changing jobs then you should look at having your own policy so that you can carry your ‘no claim’ history with you when you leave your job. Some group schemes allow you to carry your claims’ history with you when you leave the job. In that case you do not need any additional insurance. The short answer, however, is that if you can afford to go for a health insurance policy in addition to your employer’s policy then it is definitely worth it.