In the Insurance Under Two or More Coverages condition, what does the insurer limit payment to?

In the Insurance Under Two or More Coverages condition, the insurer limits payment to the actual amount of the loss or damage. This principle is crucial as it ensures that the insured does not receive a profit from their insurance claims. Instead, the payment corresponds directly to the financial loss they've experienced, which aligns with the fundamental insurance principle of indemnity, aiming to restore the insured to their prior financial position without exceeding the actual loss incurred.

This approach prevents situations where having multiple coverages might lead to excessive payouts or a double recovery for the same loss. For instance, if an entity suffers a loss covered under several policies, the claim would be assessed to determine the actual loss amount rather than a summation or maximum limit from all applicable coverages. Therefore, in practice, the insurer would evaluate the situation and provide compensation that reflects the real extent of the damage or loss rather than applying the total policy limits or other artificial caps.