In the context of multiple insurance policies covering a mortgaged private house, what does contribution refer to?

Contribution refers to the principle in insurance that applies when a risk is covered by multiple insurance policies. In the case of a mortgaged private house insured under multiple policies, contribution ensures that when a claim is made, the insurers share the financial responsibility for the claim payment proportionately. This avoids the insured receiving more than the total value of the loss, adhering to the principle of indemnity.

When a loss occurs, each insurer will contribute an amount to the claim payment based on the sum insured under their policy relative to the total sum insured across all policies. This method helps to allocate costs fairly among the insurers involved, rather than placing the entire burden of payment on a single insurer.

Understanding this principle is crucial in situations where a property is insured with multiple policies, as it ensures equitable treatment in the settlement of claims and maintains the integrity of the insurance system.