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Composite Insurance versus Joint

Composite Insurance versus Joint Insurance

Composite Insurance is nominally a contract of insurance providing cover to different insured persons in respect to their different interests in the subject matter of the contract.  Example of composite insurance would be a contract of insurance covering both the credit provider and a car owner, for their respective interests.

The simplest method is for a lender to become an insured party; however this can give rise to both commercial and legal issues.
The addition of the lender, commercially, is likely to raise an insurance premium, while legal issues will arise concerning the status of each of the insured parties that will impact on its rights under the policy.
The core distinction is:

  • the insurance is placed on a joint or composite basis.
  • And in either case each insured will be required to comply with the policy obligations
  • Meaning that both parties will be liable for the whole premium.
  • Also each insured will have a direct right of action against the chosen insurer

Where two or more people are insured under the same policy, an important feature of their professional indemnity insurance is that it is almost certainly composite rather than joint.

In the Insurance Industry, the difference between composite and joint insurance has been used and understood for many years, however law has been developed refined recently, especially as it pertains to professional protection cover.

see: The General Accident case

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