Explain the difference between Reinsurance and Double Incurance.
Dear student,
The differences between re-insurance and double insurance are:
Regards
The differences between re-insurance and double insurance are:
Re-insurance | Double Insurance |
When an insurance company accepts a huge risk and find it difficult to bear itself, then the company gets a part of risk insured with other insurance company, and it is called Re-insurance. | When insured feels that he has insured for lesser amount compared to value of property, then he can take another policy for same property, and it is called Double Insurance. |
It is a contract between insurer and re-insurer. | It is a contract between insured and insurers. |
The original insured cannot claim compensation from re-insurer. | The insured can claim compensation from all the insurers. |
The liability for loss falls on insurer who in turn can claim compensation form re-insurer. | The liability of all insurers to share the loss is in proportion to the sum assured by each of them. |
It is mandatory in some cases. | It is not mandatory in any case. |
It is desirable for fire and marine insurance. | It is desirable for life insurance only. |
Regards