What happens if you have two insurance policies covering the same property? Insurance policies commonly have provisions for this situation. Even though they are not deductibles these provisions also serve to reduce moral hazard.
Policy provisions to multiple insurance policies covering the same property:
- call for the policies to split a loss prorate (no sense in buying more than one policy)
- make one policy primary and the other excess
- bar any contribution to a loss, and
- with no provisions, both pay as in life insurance.
What is the purpose of coinsurance in my policy?