The Marine Insurance Act states that Principle Of Contribution is :
(1) Where the assured is over-insured by double insurance, each insurer
is bound, as between himself and the other insurers, to contribute rateably to the loss in proportion to the amount for which he is liable under his contract.
(2) If any insurer pays more than his proportion of the loss, he is entitled to maintain a suit for contribution against the other insurers, and is entitled to the like remedies as a surety who has paid more
than his proportion of the debt.
Now first all what is double insurance, it is when an assured takes insurance from more than one insurer. let us understand this principle with the help of an example.
suppose a company A takes a marine insurance of 10 crore with 2 insurance company say X and Y. From X it took insurance of 6 crore and from Y it took insurance of 4 crore. now suppose the subject matter got damage and the company A ask for claim which comes to be of 1 crore. now according to the principle of contribution X will pay 60% and Y will pay 40% of the claim as the proportion of the policy is also 60-40 (6 crore and 4 crore) i.e 60 lakh and 40 lakh. and if company A takes all money from X then X can ask for the rest 40 lakh from Y.