Double insurance and contribution
Produced in partnership with Susie Wakefield and Matthew Brown of Shoosmiths LLP
Double insurance and contribution

The following Insurance & Reinsurance practice note produced in partnership with Susie Wakefield and Matthew Brown of Shoosmiths LLP provides comprehensive and up to date legal information covering:

  • Double insurance and contribution
  • Overlapping insurance polices
  • Is there double insurance?
  • Consequences of double insurance
  • ‘Other insurance’ and similar clauses
  • Escape clause vs escape clause
  • Excess clause vs excess clause
  • Escape clause vs excess clause
  • Excess clause or escape clause vs rateable proportion clause

Overlapping insurance polices

There are various reasons why an insured may end up with overlapping insurance cover, whether deliberately or otherwise.

Examples include the situation where the insured takes the benefit of other insurance arranged by another party or where, in the commercial world, risk managers may be unaware of prior insurances effected by predecessors in their role.

Similarly, an insured may inadvertently take out insurance in respect of specific property without realising that the property is already covered by an existing policy with a broader scope of cover. Alternatively, the insured may simply wish to increase its amount of cover or, conceivably, to protect itself against the risk of its insurers becoming insolvent.

There is no common law requirement to avoid double insurance. Nor is there any common law duty to inform an insurer that other policies exist, save if their existence changes the nature of the insured risk, for example, gross over-insurance resulting in heightened moral hazard (Mathie v The Argonaut Marine Insurance Co Ltd (1925) 21 Lloyd’s Law Reports 145 (not reported by LexisNexis®)).

However, the existence of multiple insurances of the same subject matter is seen as increasing the opportunity for fraud. That is because it enables unscrupulous insureds an opportunity to recover more than their loss by claiming on more than one policy, each underwritten by insurers unaware that other cover exists.

As a result,

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