3.1 The rights of an assured

3.1.1 Restriction by insurers of assureds’ rights

Insurers typically seek to limit assureds’ rights under insurance contracts by limiting liability or excluding liability entirely. The common law recognised the legitimacy of such clauses. A typical scenario was where an assured purposefully destroys the assured property and seeks to recover against two insurers under separate insurance contracts. To guard against this, standard protections include: (1) requiring the assured to disclose any existing insurance contract over the same property or subject matter; (2) restricting the assured from taking any other insurance over the property while the policy is in force (breach of which results in automatic termination of the policy); and (3) including a term in the policy that would have the effect of converting the policy into an excess insurance. These insurance contracts would include one or more of the following clauses: (1) exclusion clauses, (2) rateable proportion clauses and (3) excess clauses. Another technique adopted by insurers would include in the insurance contract “Other insurance” clauses to exclude paying out on an assured’s loss.1