Case Note: Double Insurance And Untangling The ‘Other Insurance' Knot

The NSW Court of Appeal has recently allowed the appeal in Allianz Australia Insurance Ltd v Certain Underwriters at Lloyd's of London Subscribing to Policy Number B105809GCOM0430 [2019] NSWCA 271. The case concerned how two competing "other insurance" clauses, an "escape" clause and an "excess" clause, should be interpreted to determine whether double insurance applied.

The Facts

A worker was injured on a road project being managed by Baulderstone Hornibrook (Baulderstone). The worker sought compensation and obtained a consent judgement of AUD1,025,000 against Baulderstone.

Baulderstone was insured under two different liability insurance policies:

a Construction Risks - Material Damage, Public and Products Liability Annual Insurance Policy issued by Allianz Insurance Australia (Allianz) to the Roads and Traffic Authority of New South Wales (the Allianz Policy); and a Public and Products/Contract Works Liability Policy issued by Underwriters at Lloyd's of London (Lloyd's) to Bilfinger Berger Australia Pty Ltd, the parent company of Baulderstone (the Lloyd's Policy). Allianz indemnified Baulderstone against the judgement. It sought a declaration in the Supreme Court that Lloyd's were also liable to indemnify Baulderstone and sought equitable contribution. By judgement of 24 April 2019, Rees J found that the Lloyd's Policy did not respond and dismissed Allianz's claim. Allianz subsequently appealed that decision.

The Policies

The Allianz Policy contained the following presently relevant provisions:

Definitions / Interpretations to this Policy

Underlying Insurance means a policy of insurance arranged by or on behalf of an Insured either voluntarily or pursuant to a Contract (which may include a policy(ies) arranged by joint venture partners, principals, contractors, etc) that provides cover to the Insured for a risk, which save for the Underlying Insurance, would be covered by this Policy. Underlying Insurance includes those policies identified in the Schedule.

8.17 Difference In Conditions Cover

In circumstances where an Underlying Insurance has been arranged, this Policy shall be deemed to be the 'Master Policy'.

  1. In the event of the Insured being indemnified by an Underlying Insurance in respect of a claim for which indemnity is available under this Master Policy, the insurance afforded by this Policy shall be excess insurance over the applicable limit of indemnity of the Underlying Insurance.

  2. Coverage under this Master Policy shall not...

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