Dear PAO,
I purchased insurance for my delivery business’ goods from an insurance company. Later, without canceling the first policy, I obtained another insurance policy from another insurance company covering the same goods and the same risk. When some of the goods were damaged in a fire, I filed claims with both insurance companies. The second insurance company denied my claim, arguing that there was double insurance and that I failed to disclose the first policy. However, I believe I should be entitled to recover from both insurers because I paid separate premiums for each policy.
Justin
Dear Justin,
Under Philippine law, the insured cannot recover more tha n the amount of the actual loss simply because two insurance policies cover the same property. Section 95 of Republic Act (RA) 10607 or the Insurance Code recognizes double insurance when the same person is insured by several insurers with respect to the same subject and interest. In addition, in double insurance, the insurers are considered co-insurers. Hence, the insurance companies may be required to contribute ratably to the loss.
In Malayan Insurance Co., Inc. vs. Philippine First Insurance Co., Inc., GR 184300, July 11, 2012, the Supreme Court, through Associate Justice Jose Reyes, explained that double insurance requires identity of the insured, subject matter, interest, and risk.
In this regard, it is important to make reference to the pronouncement of the Supreme Court in Multi-Ware Manufacturing Corp. vs. Cibeles Insurance Corp., GR 230528, Feb. 1, 2021, penned by Chief Justice Roberto Concepcion, that the insured may not recover under a policy if the failure to disclose the other insurance violates an “other insurance clause.” The purpose of “other insurance clause” is to prevent overinsurance and the possibility of fraud.
In the present case, since both policies cover the same goods, the same insured interest, and the same fire risk, double insurance exists. However, you should have disclosed the existence of the other policy if required by the policy terms. If the policy contains an applicable “other insurance clause” and you failed to make the required disclosure, the insurer may deny the claim and avoid its obligations under the policy.
Accordingly, you cannot merely rely on having paid separate premiums to demand payment from both insurers.
We hope that we were able to answer your queries. This advice was solely based on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued trust and support.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net
