Professional Liability Guide

CHAPTER 13 – DUAL INSURANCE

when considering the ‘excess’ and ‘escape’ clauses individually, they both had the effect of denying liability because of the existence of the other policy. It then followed that the principles in Weddell v Road Transport and General Insurance Co Ltd 591 applied, and the clauses cancelled each other out. The result was that both policies responded and, therefore, Allianz was entitled to contribution from Lloyd’s. Common insured The important aspect here is that the person suffering the loss needs only to be an insured under both policies. It is not necessary that the person is the contracting party or policyholder in both policies. So much was established by Esanda v Colonial Mutual. 592 Dual insurance was found to apply where Esanda was a named insured under one policy but only had its interest noted under another. However, consideration also needs to extend beyond whether a person is specifically named or falls within a category of persons for whom the policy provides indemnity. It is also necessary to examine the full scope of the ‘ insured ’ definition and whether it may include participants up or down a contractual chain or an insured’s consultants or agents. Another common qualification to the definition of insured, which gives rise to confusion, is that additional insureds are only covered for their ‘ respective rights and interests ’. In a building context, it was previously argued that such a qualification meant that additional insureds were insured only for the work they performed; therefore, where that work damaged other parts of the project works, no cover was available to them. However, in Co-operative Bulk Handling v Jennings Industries Ltd, 593 the Supreme Court of Western Australia held that the respective right and interest of each project participant was an interest in the whole of the works. Therefore, qualifications of this type are unlikely to affect dual insurance claims. Same risk As the Court in Albion Insurance decided, it is not necessary for the policies to be of the same nature or that each policy insure all the same risks for dual insurance to arise. Provided that the risk that has given rise to the liability is covered under both policies, then dual insurance will apply. Another interesting example where the courts have considered co-ordinate liabilities (albeit in the context of contribution in circumstances other than dual insurance) was in Speno Rail Maintenance v Hamersley. 594 Speno took out liability insurance with Zurich Australia in its own name and in the name of Hamersley as part of its contractual obligations. The policy did not cover Speno in relation to the contractual indemnity it gave to Hamersley. One of Speno’s workers was injured as a result of Hamersley’s negligence. The worker sued Hamersley, who, in turn, sought indemnity from Speno and Zurich under the policy. Zurich claimed contribution from Speno because both were liable to indemnify Hamersley. The Court rejected the claim on the basis that Zurich’s and Speno’s liabilities were not co-ordinate (i.e. the same). (Critical to that conclusion was the fact that Zurich’s liability arose under an insurance contract and Speno’s did not.)

591 [1932] 2 KB 563. 592 (1993) 217 ALR 180. 593 (1996) 17 WAR 257. 594 (2000) 23 WAR 291.

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