Principle Of Contribution Under Common Law: The Principle is corollary to the principle of indemnity and will maintain its continued existence to preserve the principle of indemnity. Therefore, it applies only to those insurance contracts which are contracts of indemnity. As life and personal accident contracts are not contracts of indemnity, this principle does not apply thereto.
It should be clearly borne in mind that even though there is no contribution condition in the policy, that is to say that even if it is not mentioned in the policy that contribution would apply, nevertheless, it is the legal right of the insurers to get the benefit of contribution. The right is implied at law.However, the position as to when and how the right can be exercised differs at common law and under policy condition.
Under common law the position is this that the insured can claim the full amount of loss from any of the insurers of his choice, when that insurer will have the trouble of asking contribution from the other interested insurers. But under a policy condition the insurers may require the insured to claim proportionately from all the insurers right at the inception rather than claiming full from the policy subject to this condition. In practice, non-marine policies do usually contain a condition as such and it is most unusual to find such a condition in marine policies.
Sometimes a special clause is put in a policy to keep the same away from contributing under circumstances where the loss is covered by a more specific policy. In such circumstances, the non-specific policy having this clause shall not contribute to the loss unless the specific policy is exhausted and then only for the excess amount.
In the study of the principle of contribution also the student should try to recall the legal principle as laid down in the leading English case of CASTELLAIN V. PRESTON (1883).