Question

An insured has medical insurance coverage through 2 different providers, both covering the same expenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled?

Answer 1

Answer: The Contribution method can be used by the 2 insurance companies to settle the claim.

Explanation: Insurance refers to a risk sharing whereby the insured is indemnified by the insurer when there is an eventuality.

According to Medi-claim insurance rules, one cannot make claims with two insurance companies at the same time. Two insurance companies cannot pay for the exact same claim.

However, a claim can be split between the 2 insurance companies depending on certain terms. Moreso, in a situation where the claimed amount is higher than the sum insured under the policy on which the insured has first made the claim, he can claim the balance amount from the second indemnity policy.

Answer 2

Contribution act of settling claims will be used

Step-by-step explanation:

The contribution which is one of the principles in insurance business means when two insurance company comes together to settle a claim on a subject matter they insured in common, according to the extent of peril covered under each policy.

In this case where the both policy from the two insurance company covers the same extent under the health insurance, they are going to share the claim amount equally (i.e. 50:50)

Say the total benefit to be paid as a result of permanent disability is $50000, in this scenario, Insurance company A will pay $25000 and Company B will also pay $25000. This is because both policies cover the insured with the same benefit and conditions.