Double Insurance And Contribution

Front 1

North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1887)

Back 1

The court held that a right of contribution arose only when the policies were taken out by the same person to insure against the same risk. Thus, an insurer had no right to seek contribution from another insurer if the persons insuring the risk are different even though the risk insured may be the same. Here the policies covering the stolen vehicle were taken up by different persons.

Front 2

Commercial Union Assurance Co v Hayden [1977]

Back 2

Issues can arise where the sum insured under the policies is different. In a straightforward property insurance, then the proportion that each insurer pays will probably be determined by the ratio of the different sums insured. But where double insurance arises in a liability insurance situation or, probably, where the same property is insured by two or more, then the independent liability basis is the correct one

Front 3

Double Insurance

Back 3

In a straightforward situation double insurance will arise when the same insured has cover under more than one policy. Problems arise normally only when the same event is insured by different insureds, for example when a bailor and bailee have both insured goods against a particular loss. Here, if one insured is the person legally liable for the loss, then it is their insurer that should pay and there is no double insurance: