WE refer to the letter on insurance policy claims from H.S. of Kangar ("Filing claims: Poser for person with many insurance policies" -- NST, Oct 7).

Insurance contracts are subject to established principles of insurance. The question raised by H.S. relates to the principle of indemnity.

The objective of the principle of indemnity is to place the insured in the same financial position after a loss as he enjoyed immediately before the loss, subject to the amount of the insurance being sufficient to do this.

Essentially, an insured person will be compensated up to the amount of financial loss he incurred, not more and not less. This principle prevents any person from making a profit from a loss. It attempts to prevent fraudulent claims which are against public interest and detrimental to other policyholders as well to ensure ultimate affordability of insurance for all.

Generally, all insurance policies are subject to the principle of indemnity. Life policies and personal accident policies are the exception since the value of life and limb cannot be measured in terms of money.
A basic hospital and surgical insurance, however, is subject to the principle of indemnity.

For this class of insurance, in putting this principle into practice, insurers would require the original bills and receipts for claims settlement.

If an insured person has more than one policy, he can claim the balance from the other policies for the portion that was not already paid under the first policy by providing the necessary information to the other insurers concerned, without the original bills or receipts.

However, as insurance policy details may differ with each insurer, we recommend that policyholders read their policies or refer to their insurers for better understanding of the terms and conditions of the policies that they hold.