1.1 Background: the theory of double insurance

1.1.1 Problems with double insurance

There is always the risk of fraud when an assured takes out an insurance policy. An assured can take out numerous insurance policies and make claims under all policies. Insurers have implemented mechanisms to prevent an assured receiving more than he is entitled to. A question is whether the use of exclusion or limitation clauses in the policies to prevent recovery is justifiable. This book examines the history, development of the law of insurance and the factors the courts consider when deciding such issues – for example, whether there is sufficient protection for an assured when double insurance arises, and under what circumstances does an insurer have to pay out under the insurance policy. The cases do not provide any firm guidance. In some cases, the trial judge may find that the facts do not give rise to double insurance. However, on appeal, the appeal court may find that there is double insurance. This clearly illustrates the complexities of double insurance, and the difficulties the courts face when trying to provide principles or guidelines on double insurance.1