Double Insurance And The Right Of Subrogation

The landmark case of Speno Rail Maintenance Australia Pty Ltd v Metals & Minerals Insurance Pte Ltd & Ors [2009] WASCA 91 may limit an insurer's ability to recover money paid out for a claim where another insurer is also potentially liable to contribute under the principle of double insurance.

The decision shows that carefully worded 'other insurance' clauses are not voided by the Insurance Contracts Act 1984 (Cth) and can be used by insurers to avoid double insurance claims. It also highlights that insurers may need to consider measures that encourage their insureds to make a claim for indemnity under their policy first (even if another insurance policy providing cover has a lower deductible) to avoid the loss of a right of subrogation.