Contribution
Contribution is the insurance principle that applies when the same risk is covered by more than one policy. When a claim occurs, each insurer pays only a proportionate share of the loss — equal to its proportion of the total cover. This prevents the insured from profiting by collecting the full loss from multiple insurers.
How contribution works
Contribution arises from the principle of indemnity: insurance should restore the insured to the position they were in before the loss — not better. If two policies cover the same item, allowing full recovery from each would provide a profit from the claim.
Example: You have contents covered under two policies — Policy A for £50,000 and Policy B for £50,000 (total cover: £100,000). Your actual contents are worth £80,000 and you suffer a £20,000 loss.
You receive £20,000 total — the amount of your actual loss — not £40,000. Each insurer bears half.
When contribution typically arises
- Home contents: Accidentally holding two separate contents policies (e.g. one from a bank account benefit and one purchased directly) covering the same household
- Travel health cover: When a travel policy and a health insurance policy both cover medical expenses abroad
- Business property: Commercial property insured under a specific policy and also under a broader group policy
- Liability insurance: Personal liability under a home policy and separately under an umbrella policy may both apply to the same claim
Contribution does not apply to life insurance — multiple life policies all pay in full. See our guide to how much life cover you need.
Contribution vs subrogation
Both principles prevent over-recovery in indemnity insurance but apply in different circumstances:
- Contribution applies between multiple insurers covering the same risk for the same insured. It governs how multiple insurers share a payout.
- Subrogation applies after a claim is paid and allows the insurer to pursue a third party responsible for the loss to recover the amount paid. See subrogation.
Together, contribution and subrogation both express the core principle that indemnity insurance should make you whole — not generate a profit from a loss. This principle also underpins utmost good faith, which requires full disclosure of all relevant facts including other insurance policies.
Contribution FAQ
Frequently asked questions
- If two policies cover the same items and you suffer a loss, the contribution principle applies. Both insurers will be notified, each will assess the claim, and each will pay only their proportionate share. You cannot collect the full loss twice. It is legal to hold two policies covering the same risk, but the financial benefit is limited — you are paying two premiums but will only receive one payout in total. Holding duplicate cover is usually wasteful rather than beneficial.
- No — contribution does not apply to life insurance, which is a benefit contract rather than an indemnity contract. You can hold multiple life insurance policies and each will pay its full sum assured on death, regardless of how many policies you hold. This is because life insurance does not attempt to indemnify a measurable financial loss — it pays an agreed amount. The contribution principle only applies to indemnity insurance (property, liability, health).
- Both are principles that prevent over-recovery in insurance, but they apply in different situations. Contribution operates between multiple insurers covering the same risk — each pays their share. Subrogation operates between the insurer and a responsible third party — after paying a claim, the insurer takes on the insured's right to recover that amount from whoever caused the loss. See our entry on subrogation for a full explanation.
- No — if both policies genuinely cover the same risk and loss, both insurers have an obligation to contribute, regardless of which was claimed against first. The first insurer may pay the full claim and then seek contribution from the second insurer directly (an inter-insurer recovery), or both may be involved from the start. You should disclose the existence of both policies to both insurers when making a claim. Failing to disclose a second policy covering the same risk could be a material non-disclosure. See material fact.