Abstract

Double Insurance

Article

Double Insurance

There is double insurance when an insured is covered against the same loss which has been incurred with different insurers. The policies need not be identical, provided that the indemnity of each is engaged in respect of the particular loss, for example a Workers’ Compensation policy and a Motor Vehicle Liability insurance policy. A test is whether payment of indemnity by one insurer would provide the other with a defence to a like claim against it because by the payment the insured had been indemnified against the insured risk and had received all that he was entitled to receive under both policies. He could decide which insurer or insurers to claim against, and in what order, but this was unfair to the insurer which bore an undue burden of the loss. This was remedied by the equitable doctrine of contribution under which the insurer meeting the claim could recover from the other insurers a contribution  to the payment made for the benefit of all: Albion Insurance Co Limited v Government Insurance Office [1969] HCA 55; (1969) 121 CLR 342.