What is referred to as the situation when multiple insurance companies insure the same risk?

The situation when multiple insurance companies insure the same risk is known as double insurance. This occurs when the same risk is covered by more than one insurance policy, potentially leading to the insured being able to claim the full amount from each insurer in the event of a loss.

Double insurance is utilized for various reasons, including when a policyholder wants to ensure adequate coverage for high-value items or risks that may exceed the limits of a single policy. It is important to note that in the event of a claim, the insured is typically only entitled to recover the actual loss suffered, meaning that they wouldn't receive more than the total loss amount despite having multiple policies that cover the same risk.

In contrast, over insurance refers to a scenario where the insured amount exceeds the value of the risk, while joint insurance involves a group of insurers underwriting a single risk, and comprehensive insurance generally refers to a type of insurance policy that provides broad coverage for various types of risks within a specific category.