Money Grouse: When two positives add up to a negative

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PETER Higgins and his wife Deborah booked a holiday in Greece last February. They were due to travel at the end of September, but in July Mrs Higgins' doctor advised her not to travel. She had discovered she was pregnant and there was a risk of miscarriage.

The couple did not expect to have any difficulty recovering the pounds 150 deposit they had paid for their cancelled holiday, since they were covered by two insurance policies. They had bought one through Planos Holidays, the company that they booked their holiday with, and a second from Barclays Bank.

'We usually take out a Barclays policy as a back-up,' said Mr Higgins.

As the couple has now discovered, insurance companies become extremely jumpy when they discover that someone has insured themselves twice for the same risk. They worry about fraud, and even when a claim is perfectly legitimate, normally expect the other company to share the cost of the claim.

The Higgins submitted a claim on the Barclays policy in August. Mr Higgins made it clear that he had another policy and Francis Charsley, the loss adjusters scrutinising claims for Home & Overseas - the insurer that underwrote the Barclays policy - wrote back asking for further details of the policy and whether any claim had been made.

Further correspondence passed between Mr Higgins and Francis Charsley, but the loss adjuster refused to sanction the payout without receiving more details of the other policy.

Mr Higgins became angry by what he saw as unnecessary delay. He argued that the contract with Barclays and Home & Overseas was quite separate from the one with the tour operator and should be assessed on its merits.

But it is standard industry practice to ask for details of the second insurer in a case like this. Insurance companies want to check that they are not becoming the victim of a fraudulent claim, and also to arrange to get half of the money back from the other company. But underlying that, said a spokesman for the Association of British Insurers, is the legal principle of indemnity.

'This means that insurance is there to put someone in the same position as they were before, not to give them a profit.'

Mr Higgins said he had never heard of this principle, and complained that he certainly did not recall any warning about it in the documents with either of the travel policies.

The insurance industry's antipathy to double-cover is not usually evident from policy documents, the ABI's spokesman readily admitted. 'If there is anything in the policy it would exclude cover for an item 'more specifically insured' by another policy. For example, if you want to claim for valuables lost on holiday but which are named specifically in the all risks section of your household policy you would normally be expected to claim from the household policy.'

After intervention from the Independent, Francis Charsley and Home & Overseas agreed to pay the claim, but probably could have avoided their dispute with Mr Higgins if they had explained more clearly the reasons for their questions about the other policy. The lesson for others is to avoid insuring twice.

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