Explain the difference between Reinsurance and Double Incurance.

Dear student,

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.


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