X was a risk averse person by nature. He wanted adequate coverage for his health and so he took two health insurance policies from two different companies. But, he was unaware of the fact that he has to inform about the

X was a risk averse person by nature. He wanted adequate coverage for his health and so he took two health insurance policies from two different companies. But, he was unaware of the fact that he has to inform about the policies to both the insurers (new and existing). One is required to fill up proposal forms, wherein the insurer asks for disclosure of any existing policy. The main purpose of asking this is because there is a contribution clause in most policies. 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. The norms regarding the contribution cause have slightly changed recently. One may also go for another policy of policies, if suppose one is having a policy provided by one's employer and the coverage is not adequate for the entire family. One may also like to have separate policies for one's parents as well as for one's spouse and kids. If a customer is holding more than one policy he has the choice to prefer the claim with any of the insurers. For e.g. If he holds an individual health policy with Insurer X and a group health policy with insurer Y. he may choose to make his claim with any of the insurers. As far as the liability of the insurance companies is concerned, the rules specify that the contribution clause will not be applicable if ones' claim amount is less than the sum assured of the insurer where are is claiming. And only if ones" claim amount is more than the sum assured of the policy, the insurance company is allowed to impose the contribution clause. Therefore, you need to inform about the existing policy or policies to the other insurer(s) while buying a policy or making a claim simply because if you do not disclose this fact, you are violating the terms and conditions of the health insurance contract and in case of investigation this could be termed as mis-representation.