What is contribution clause in health insurance

What is a contribution clause and how does it apply during claim settlement? The principle of contribution is implemented when multiple insurance policies are covering the same property or loss, the total payment for actual loss is proportionally divided among all insurance companies during a claim settlement.

What is contribution clause?

The contribution clause means that for the same 'insured interest' if there is more than one policy, then in case of any claim situation all the policies will contribute in equal proportion to the sum insured.

What is contribution condition in insurance?

The principle of contribution states that if the loss arises and you have taken more than one insurance policy, then the loss will be covered by the policies based on the proportion of the coverage the insurance policy provides.

What is contribution in insurance with example?

Principle of Contribution\n\n It states the same thing as in the principle of indemnity, i.e. the insured cannot make a profit by claiming the loss of one subject matter from different policies or companies. Example – A property worth Rs. 5 Lakhs is insured with Company A for Rs. 3 lakhs and with company B for Rs.1 lakhs.