Double Recovery

What Does Double Recovery Mean?

Double recovery is a legal offense that occurs when an insured party makes multiple claims from different insurers for the same loss. This practice violates a fundamental principle of insurance, which states that no individual should profit from their insurance policies. That same logic applies to indemnity insurance for cars, where any payout is capped at the actual value of what was lost rather than something higher.

Insuranceopedia Explains Double Recovery

Insurance is designed to provide protection against losses and is not intended to generate profit for policyholders in the same way that trading financial instruments would. This principle is why double recovery is considered illegal. Insurers often include clauses, such as a double indemnity clause in certain policies (like property insurance contracts), to prevent the insured from making multiple claims for the same loss during the claims period. Homeowners who carry overlapping property coverage from two separate policies can run into this problem if both insurers pay out, so comparing how major homeowners insurance companies handle duplicate claims is worth checking before stacking a second policy on the same home.