Welcome once again to our blog and specifically to this series of articles about the world of insurance. Today it's time to talk about Insurance Concurrency. In this article we explain what insurance concurrence is and how this situation is resolved, which is more common than you think. We already told you that you cannot charge twice for the same incident.
At the same time, and before continuing with today's topic, I want to remember and include links to previous articles on this topic of insurance:
Why does insurance concurrence occur?
When an incident occurs that affects an asset that is insured by several different policies at the same time, we are faced with a case of concurrent insurance. This means that the owner of the property could receive compensation greater than its actual value if each insurer pays the total coverage, which would represent an undue benefit for the insured.
The purpose of insurance is to restore the value of damaged or lost property, not to generate illicit enrichment for the insured. Therefore, if there is insurance concurrence, each insurer will only pay the proportional part that corresponds to it so that the total sum does not exceed the insured value of the property.
The Insurance competition is regulated by Law 50/1980, of October 8, on Insurance Contracts.. According to this law, if you have two or more insurance policies that cover the same risk on the same asset in different companies, you must inform each of them of the existence of the other insurance policies.
What to do if you have two insurance policies for the same asset?
Sometimes it may happen that two insurance policies have been taken out for the same property, such as home insurance and community insurance. This is called overinsurance and it can cause problems if you suffer an accident.
In the event of an accident, the first thing you should do is inform both insurance companies of what happened and the name of the other insurer. This will prevent suspicion of attempted fraud.
The two insurers will agree to pay the compensation that corresponds to you, always without exceeding the real value of the damage.
If you do not notify both insurers voluntarily and there is overinsurance, you may be left without coverage and have to assume the cost of the repair yourself.
In any case, there are two common ways to resolve these cases:
⇒ Your private insurer is in charge of fixing the damage and then claims its share from the community insurer.
⇒ The community insurer takes care of everything and then asks your private insurance to pay its corresponding share, with your prior written authorization.
What to do if the community insurance and your home insurance overlap?
Sometimes it happens that, in the event of an accident in your home, you don't know if you should claim from the community insurance or your own. This can lead to conflicts and complications if not resolved appropriately.
It all depends on the coverage that each policy has. Community insurance can cover the entire building, including the private parts of each owner, or just the common areas. On the other hand, your home insurance may also include protection of the common continent, in addition to the private one.
To avoid confusion and problems, it is important that you know the conditions of both insurances well. Therefore, we recommend that in the event of an accident, you request a copy of the policy of your community of owners or neighbors from the president of the community or the Property Administrator.
How are the costs of an accident divided between community insurance and home insurance? An example with water damage
Water damage is the most common in a neighborhood community and is usually caused by burst pipes. But how do you know if the pipe is community or private? What insurance covers the costs? What happens if there is insurance competition? The answer to these questions depends on the appraisal of the incident and the coverage contracted in each policy.
In general, community insurance covers the risks that affect the building (façade, foundation, floors, doors, windows, facilities, garages, gardens...) and the civil liability of the community for any damage it may cause to third parties.
For its part, home insurance covers the contents of the home (furniture, appliances, clothing, jewelry...) and the contents that are not common (air conditioners, interior doors, awnings...). In addition, it also includes the civil liability of the owner or tenant for any damage that may be caused to third parties.
When an accident occurs in the common area that affects a home or premises, both insurances intervene: the community insurance for civil liability and the home insurance for the non-common contents and container. In that case, a concurrence of insurance is established and the expenses are distributed according to the proportion that corresponds to each one.
Can you collect several compensations for the same insured risk?
In general, it is not possible to take out more than one insurance for the same risk and receive all compensation in the event of an accident. This is due to the principle of indemnity, which prevents the insured from obtaining an economic benefit from the situation.
However, there are some exceptions to this rule, such as life, death and accident insurance. These insurance policies do not have a specific value for human life, but are based on the insured sum chosen by the contracting party. Therefore, if a person has several insurance policies of this type and dies or suffers an accident, their beneficiaries or they themselves will be able to collect all the corresponding compensation.
In the case of death insurance, which is service provision insurance, this exception also applies. If the deceased had more than one death insurance contract, the insurer who was unable to provide the funeral service will have to pay the insured sum to the heirs of the insured.
Who should you turn to for advice?
To avoid confusion and unnecessary claims, it is important to have the advice of the property manager (in this case Meridional) and insurance experts for neighborhood communities (our trusted brokerage, Coseba). They will help you choose the best coverage for your case and answer any questions you may have about your insurance.
At Meridional we know that your home is the most important thing to you. For this reason, we offer you insurance tailored to your needs, with the coverage you really need and without surprises. Our advisors are in charge of analyzing your situation and explaining clearly what you are hiring and what you are not. In addition, we guarantee you the best price on the market and an exclusive and personalized service.
Trust Meridional, the company that takes care of your home like you do.
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