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Difference Between Double Insurance and Reinsurance

Main Difference

The main difference between Double Insurance and Reinsurance is that Double Insurance is a situation in which the same risk is insuring more than one time, whereas Reinsurance is the situation in which the insurer transfers the equal chance to another insurance company.

Double Insurance vs. Reinsurance

The double insurance is a form of such insurance, in which the individual or the corporation assures a specific belonging with more than one insurer or with the numerous strategies from the similar insurer, whereas the reinsurance, is a form of such insurance in which the same risk on the policies is transferring by the insurance company, to ensure the same procedures with another insurer. The advantage of the double insurance is that the double insurance can be demanded by all the insurers, while the benefit of the reinsurance is that the reinsurance can be claimed only by the real insurer who is going to apply for the reinsurance.

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The primary purpose of the double insurance is to promise the profit of the insurance, whereas the primary use of the reinsurance is to decrease the hazard of the insurer. The double insurance policy is focusing on the property, while the reinsurance policy is focusing on the real risk of the insurer. In the case of the double insurance, the loss is sharing by all the insurers from the amount of the protection, whereas in the case of the reinsurance, the damage is sharing by all the reinsurers from the amount of the reinsurance. The double insurance is taking an interest in insurable interest, while the reinsurance is not taking an interest in protection.

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In the case of double insurance, the agreement of insurance is necessary to make the protection possible, whereas, in the case of the reinsurance, the contract of the coverage is not necessary to make the protection possible.

Comparison Chart

Double InsuranceReinsurance
Double insurance is the situation in which the same risk is assuring more than once.Reinsurance is the situation in which the insurer transfers an equal chance to another insurance company.
Claimed By
All the insurersOriginal insurer
Objective
To guarantee the benefit of insurance.To diminish the risk of an insurer.
Focusing On
PropertyReal risk
Penalty
Sharing by all the insurersSharing by all the reinsurers
Interested In Insurance
YesNo
Contract of Insurance
necessaryNot necessary
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What is Double Insurance?

The double insurance is a form of such insurance, in which the singular or the establishment declares explicit possession with more than the one guarantor or with the several strategies from the similar insurer, The advantage of the double insurance is that all the insurers can demand the double insurance, and the principal purpose of the double insurance is to promise the profit of the insurance. The double insurance policy is focusing on the property. In the case of the double insurance, the loss is sharing by all the insurers from the amount of protection.

The double insurance is a kind of insurance where the same issue stuff is insuring more than once. The method of double insurance is considering a legal act, and in the case of the harm, the insured can be declaring from both insurers. The insurers are responsible for the compensation under their relevant rules. The double insurance is taking an interest in insurable interest. In the case of double insurance, the agreement of insurance is necessary. The insured can privilege the amount from the procedures, and the insurer cannot claim the amount more than the actual loss as well.

Double insurance is also tracking the elementary values of insurance. The double insurance is only arising when a large part of the same risk is protecting by both insurances. The strategies also conceal the equal importance. There can be no double insurance without the time of the claim, and the insured may improve the entire amount of his damage from the insurer.

What is Reinsurance?

The reinsurance is a kind of such insurance in which a similar risk on the plans is transmitting by an insurance company to insure the same policies with another insurer. Plus point of reinsurance is that reinsurance is demanding only by the actual insurer who is working to apply for the reinsurance. The reinsurance procedure emphasizes on the real risk of the insurer. In the case of the reinsurance, the loss is distributing by all the reinsurers from the total of the reinsurance. The reinsurance is no compelling interest in insurance.

The reinsurance comes about when various insurance companies segment risk by obtaining insurance policies from other insurers to bind their specific complete loss in the case of any tragedy. The principal purpose of the reinsurance is to reduce the danger of the insurer.

There are some classes of reinsurance; the first is treaty reinsurance; this type of reinsurance generally covers all current and existing policies until the contract is expiring or is canceling. The second is facultative reinsurance, this type of reinsurance covers individual risk, instead of group policies like a treaty, and it is transferable to a procedure by procedure basis, in the meantime, the treaty policies are requiring the signatures on all the parts of a contract. The third is proportional; it is allowing the main company and the reinsurers to share the payments and possible losses. The forth is non-proportional; in this case, the leading company recalls an absolute risk and gives the reinsurer an amount of coverage. It is usually applying only in tragic circumstances.

Key Differences

  1. In the double insurance, the same situation is insuring more the once, whereas, in the reinsurance, the same risk is insuring by another person.
  2. The double insurance is focusing on the property; on the other hand, the reinsurance is focusing on real risk.
  3. The double insurance is claiming by all the insurers; conversely, the reinsurance is claiming by the real insurer.
  4. The objective of double insurance is to promise the benefit of protection; on the flip side, the aim of reinsurance is to decrease the risk of insurer.
  5. In the double insurance, the loss is sharing by all the insurers; on the other hand, in the reinsurance, the damage is sharing by all the reinsurers.
  6. The agreement of the insurance requires double protection; on the other side, the contract of insurance does not need in the reinsurance.

Conclusion

The double insurance and the reinsurance both sound the same, but they both are different in a sense. Double insurance is engaging by the insured. In contrast, the reinsurance is a contract amongst two guarantors, to protect a part of the danger, and the reinsurance is participating by the insurer.