UK: Double or Quits: recent Caselaw on Double Insurance

Last Updated: 26 August 2010
Article by Nigel Brook

First published in The Review August 10

Double insurance arises when the same party is insured with two (or more) insurers in respect of the same interest on the same subject-matter against the same risks. The general rule is that (subject to the terms of each policy), the insured can recover in full from either insurer and the paying insurer is then entitled to a contribution from the other insurer.

Insurers commonly try to limit, or even exclude, the right of contribution by including a contractual term in their policy. The most commonly used terms are designed to have the following effects if there is other insurance:

  1. transmute the policy into an excess layer policy (an "excess clause"); or
  2. limit the insurer's liability to a rateable proportion of the loss (a "rateable proportion clause"); or
  3. exclude indemnity altogether (an "escape clause").

A recent case, National Farmers Union Mutual Insurance Society Ltd v HSBC Insurance (UK) Ltd ("the NFU case"), provides a reminder of two questions which have to be asked in the event of potential double insurance:


Following exchange of contracts on a property, the risk of damage to a property passes to the buyers (under common law). In the NFU case, the buyers therefore took out a policy with NFU, which insured them against damage by fire. The policy provided that if there was insurance covering the same damage, the insurer would only pay its share (i.e. a rateable proportion clause). Following a fire at the property 17 days after exchange of contracts, NFU paid out and the issue then became whether there was any other insurance covering the same damage.

The sellers were insured by HSBC at the time of the fire against damage to the building, and the policy contained an extension covering anyone buying the property (until completion of the sale or the end of the policy, whichever was sooner) but provided that the insurer would not pay "if the buildings are insured under any other insurance".

Question 1: Is this really a case of double insurance?

The deputy judge (Gavin Kealey QC) held that this was an escape clause and that therefore the only policy covering the buyers in respect of the fire was the NFU policy. He said that "the grant of buildings cover by HSBC to buyers ... was directly qualified by the proviso [i.e. that there is no other insurance in place]: the one cannot properly be separated from the other". Accordingly, this was not a case of double insurance. The buyers were never covered under the HSBC policy and NFU was not entitled to a contribution from HSBC. In reaching this conclusion, the judge had regard to the primary purpose of the policy extension: it was intended to provide valuable protection to HSBC's policyholders (the sellers), in the event that the buyers were otherwise uninsured (and so the cover would enable or encourage the buyers to complete the purchase following damage to the property between exchange and completion).

If this had been a case of double insurance, though, a second question would then have arisen:

Question 2: How do contractual terms in the two policies interact?

How the different clauses mentioned above interact with each other has been explored to a certain extent in English law. It is an established principle that, if both policies (which would otherwise cover the loss) contain an escape clause, the two exclusions will cancel each other out – since the absurd alternative would be that neither policy responded. So the insured can claim the entire loss under either policy but (since there is double insurance) liability is ultimately shared rateably between the insurers (see Weddell v Road Transport & General [1932]).

It seems likely that the same principle would apply where both policies contain an excess clause (although there is no reported English decision on this yet). Furthermore, where both policies contain a rateable proportion clause, those clauses will both apply and each insurer will be liable only for its rateable proportion of the insured's loss (see Gale v Motor Union Insurance [1928]).

What happens where the two policies contain different, conflicting clauses? This is where the older cases point in conflicting directions.

In Gale v Motor Union Insurance Company [1928] both policies contained an escape clause and a rateable proportion clause. The court concluded that in both policies the one clause modified the other, such that both operated on a rateable proportion basis. By contrast, in Austin v Zurich General Accident [1944] both policies contained an escape clause; in addition one policy contained a rateable proportion clause and the other contained an excess clause. The judge did not find that the escape clause in either policy was modified by the other provision. Instead he concluded that the escape clauses cancelled each other out; and that the rateable proportion and excess clauses did so too.

In the NFU case, Kealey QC commented (obiter) that in his view it would have been more correct to say that the policy with the rateable proportion clause was liable to the full extent of its limits and that the other policy only provided excess cover. In other words, the excess clause prevailed over the rateable proportion clause.

The HSBC policy in the present case contained an excess clause as well as an escape clause. Kealey QC decided that the escape clause was not modified by the excess clause (as was held to be the case with the rateable proportion clause in Gale, above). Instead the escape clause took precedence because it applied specifically to cover for buyers while the excess clause had more general application.


Kealey QC's analysis suggests that there might be a hierarchy of clauses (depending on the precise circumstances of a case). So an exclusion clause or (according to Kealey QC) an excess clause in one policy would prevail over a rateable proportion clause in the other, such that the second policy would have to respond in full to any loss. What if one policy contains an exclusion clause and the other an excess clause? And does it make a difference if the loss exceeds the limit of one of the policies? These issues remain to be resolved by the English courts. There are also open questions about the interaction of inconsistent "other insurance" provisions in the same policy.

In conclusion, insurers would do well to check whether the "other insurance" provisions in a policy are self-consistent and apt.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Nigel Brook
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions