Say my car started a fire and the fire caused damage to my house, resulting in a loss of $1000. Is it legal/ethical for me to file a claim with my car insurance while at the same time filing a claim with my house insurance?
Assuming that both policies actually cover the loss, this is called “double insurance.” Generally speaking, you can claim against both insurers, but you can only recover the loss once. See my answer to another question about double recovery for more about the general principles that apply when a plaintiff attempts to recover the same loss from multiple defendants.
In the specific context of insurance, there will normally be terms in the insurance contract as well as local statutes which require the claimant to notify the insurers of one another’s existence, and determine the extent to which the insurer who paid can recover contribution from the insurer who didn’t. This issue is particularly complex in the United States where insurance is separately regulated in each state.
Some of the complexities that arise are reviewed in Russ, The double insurance problem – a proposal (1961) 13(2) Hastings Law Journal 183, although this is now rather outdated. In the context of health insurance, the adjustment of liability for doubly-insured risks is referred to as coordination of benefits and may be regulated by model laws promulgated by the National Association of Insurance Commissions. I am not aware of any model law or legal principles applicable throughout the United States that would determine the outcome in the case you describe of home and car insurance.
The aim of insurance is merely to return you to a previous financial position after some sort of disaster or unseen circumstance.
Generally, the only insurance you can have as much of as you like is life insurance. In your case if you double insure your house there will be assessment of the damages and each insurer will pay half.
If you take the full amount of damages from more than one insurer then you are committing plain old insurance fraud. Depending on the amount of money involved, you can get into a lot of trouble for doing that.
If you pay for 100K worth of coverage on the same event happening to the same thing, from two insurers you will not have 200K coverage: you will have 100K coverage with payouts split by two insurers. That makes the second policy redundant.
It is also worth noting that some insurance is illegal to be doubled (in my jurisdiction at least). Medical insurance (Medical Aid) is illegal to have double. Although there are certain top up policies you can have for serious illness like cancer, these are just additional cover and not a full medical aid.
I have been through a house fire and went through a few intricacies with the 2 insurance companies involved. A few issues are relevant here.
A booster seat for the car was stored in the attic. The car was not damaged but the Insurance company insisted that I file a separate claim for the car as the seat belonged to the car. This way they could claim two lots of excesses. I refused, and they eventually settled.
As mentioned by others, generally
If the total damage is $1000 and you claim under two policies, that would be $500 each. If your excess is $500 each, you won't get a cent.
(1) I had an interesting scenario. The house policy and the contents policy each paid 3 months of rent while the house was getting rebuilt. My argument with them was that they knew it would take a year to rebuild, so they should have offered me options. So they re-interpreted their policy (supposedly "just for me"). Once the first policy had paid out for 3 months, it no longer applied, so then they paid me for 3 months from the other policy.
(2) I had 2000 books, many of which were damaged. I could have purchased newer ones on Amazon. But then I would have benefited. Instead, they made me buy a similar, second-hand one for each damaged book. I had to track each book down. And in each case, it was more expensive than buying newer ones. But I did not benefit
