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Say my car started a fire and the fire caused damage to my house, resulting in a loss of $1000. Is it legal/ethical for me to file a claim with my car insurance while at the same time filing a claim with my house insurance?

  • If yes, will I get $1000 (possibly minus any deductibles) from each insurance policy?
  • If no, which insurance company should I file a claim from?
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    Are you asking if you suffer losses of $1,000 you can get $2,000 in return? I don't know what the situation is in America, but in the UK that might amount to fraud.
    – Rick
    May 23 at 8:57
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    If you want to know whether it's ethical don't ask lawyers; ask on Philosophy SE.
    – Stuart F
    May 23 at 13:23
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    Not the scope of the original question (and IANAL), but if a person/business was insured both for property damage/loss of their building as well as business continuance insurance with separate policies, a single incident that prevents their doing business and also causes damage to their building could easily trigger claims against both policies since each cover different scenarios and losses.
    – Milwrdfan
    May 23 at 18:53
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    @Rick How is it fraud? You've been paying insurance twice over. What would be fraud is if the insurance company was willing to accept insurance payments but have no intention of paying out.
    – Gregory Currie
    May 24 at 2:42
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    @GregoryCurrie Because each insurance covers only items that are not covered otherwise. And that's what you pay for. If you insure your car five times, it is actually only covered once. Paying five premiums is stupid and the insurance companies will be very grateful, but paying five times more doesn't give you more coverage.
    – gnasher729
    May 24 at 8:19

3 Answers 3

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Assuming that both policies actually cover the loss, this is called “double insurance.” Generally speaking, you can claim against both insurers, but you can only recover the loss once. See my answer to another question about double recovery for more about the general principles that apply when a plaintiff attempts to recover the same loss from multiple defendants.

In the specific context of insurance, there will normally be terms in the insurance contract as well as local statutes which require the claimant to notify the insurers of one another’s existence, and determine the extent to which the insurer who paid can recover contribution from the insurer who didn’t. This issue is particularly complex in the United States where insurance is separately regulated in each state.

Some of the complexities that arise are reviewed in Russ, The double insurance problem – a proposal (1961) 13(2) Hastings Law Journal 183, although this is now rather outdated. In the context of health insurance, the adjustment of liability for doubly-insured risks is referred to as coordination of benefits and may be regulated by model laws promulgated by the National Association of Insurance Commissions. I am not aware of any model law or legal principles applicable throughout the United States that would determine the outcome in the case you describe of home and car insurance.

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    Thank you for the answer! Hypothetically if each insurance has a $500 deductible, then filing two claims will result in me getting $500 from each company, thus resulting in getting $1000 total to cover the actual loss. Will this be legal?
    – Zuriel
    May 23 at 23:51
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    @Zuriel - A "deductible" is how much $ they deduct from their payment to you. So if its $10,000 of covered losses, they'd only pay you $9,500. So the real question is if the double coverage means they will try to split the payment between themselves, turning what had been a $500 deductible into to a $1,000 deductible. In the example, you'd only get payment of $9,000.
    – T.E.D.
    May 24 at 14:00
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You don't get to profit off an insurance claim.

The aim of insurance is merely to return you to a previous financial position after some sort of disaster or unseen circumstance.

Generally, the only insurance you can have as much of as you like is life insurance. In your case if you double insure your house there will be assessment of the damages and each insurer will pay half.

If you take the full amount of damages from more than one insurer then you are committing plain old insurance fraud. Depending on the amount of money involved, you can get into a lot of trouble for doing that.

If you pay for 100K worth of coverage on the same event happening to the same thing, from two insurers you will not have 200K coverage: you will have 100K coverage with payouts split by two insurers. That makes the second policy redundant.

It is also worth noting that some insurance is illegal to be doubled (in my jurisdiction at least). Medical insurance (Medical Aid) is illegal to have double. Although there are certain top up policies you can have for serious illness like cancer, these are just additional cover and not a full medical aid.

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  • I could imagine that you paid for private health insurance, then a new employer pays health insurance as a benefit. Obviously you shouldn't get paid a $100,000 bill paid twice and be able to keep $100,000 in your pocket, but the fact alone would be illegal?
    – gnasher729
    May 24 at 10:52
  • Or in a traffic accident, my health damage might be covered by someone else's third party liability insurance, the car owners passenger insurance, and my own health insurance.
    – gnasher729
    May 24 at 10:53
  • I can only speak out of a South African context but you as employee are either going to negotiate so that a part of your medical aid is paid by the employer or opt into the company plan
    – Neil Meyer
    May 24 at 10:59
  • Generally in South African most companies just employ on a cost to company basis. They offer a subsidized retirement plan and can negotiate good medical insurance prices for the employees which you are free to use.
    – Neil Meyer
    May 24 at 11:02
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I have been through a house fire and went through a few intricacies with the 2 insurance companies involved. A few issues are relevant here.

A booster seat for the car was stored in the attic. The car was not damaged but the Insurance company insisted that I file a separate claim for the car as the seat belonged to the car. This way they could claim two lots of excesses. I refused, and they eventually settled.

As mentioned by others, generally

  1. Only one insurance policy applies if you have two policies with the same company.
  2. You can't benefit from the insurance claim

If the total damage is $1000 and you claim under two policies, that would be $500 each. If your excess is $500 each, you won't get a cent.

(1) I had an interesting scenario. The house policy and the contents policy each paid 3 months of rent while the house was getting rebuilt. My argument with them was that they knew it would take a year to rebuild, so they should have offered me options. So they re-interpreted their policy (supposedly "just for me"). Once the first policy had paid out for 3 months, it no longer applied, so then they paid me for 3 months from the other policy.

(2) I had 2000 books, many of which were damaged. I could have purchased newer ones on Amazon. But then I would have benefited. Instead, they made me buy a similar, second-hand one for each damaged book. I had to track each book down. And in each case, it was more expensive than buying newer ones. But I did not benefit

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