In this April 2022 judgement, the court reviewed and considered the doctrine of double insurance in the context of a motor vehicle accident claim where the third party insurer settled the claim and then sought a contribution from the insurer of the employer of the driver. And the effect in that context on double insurance of the Australian Road Transport Third Party Insurance Act.
The judgment contains a useful review of the principles and Australian authorities on the doctrine of double insurance which are in essence similar to South African insurance law.
The doctrine arises when an insured is entitled to an indemnity from two different insurers in respect of the same liability.
The rationale is that payment by one insurer benefits the other and the equitable principle of indemnity requires that the burden be shared.
The question was whether the doctrine applied in the circumstances of the case and whether the insured was the same insured entity.
Under the policy issued by the defendant insurer, the insured was the injured party’s employer.
The plaintiff insurer’s policy was issued to the registered owner of the vehicle in which the claimant was a passenger.
The claimants’ employer neither owned nor used the vehicle involved in the accident itself. An employee of the employer, not the owner of the vehicle, used the vehicle.
On the face of it that would lead to the conclusion that the insured was not the same with the result that there is no double insurance.
The court however was required to consider the position under the Road Transport Third Party Insurance Act.
The driver of the vehicle was also employed by the claimant’s employer and at the time of the accident was at work carrying out his duties in the course of his employment.
It was accepted that the employer was vicariously liable for the driver’s action with the consequence of bringing it within the statutory provisions as an insured by reason of the relevant provisions of the legislation.
The court said that on the authorities it was not essential that the policyholder be the same. What was critical is that the risk that is insured is the same and that the insured is the same.
The time for assessing when the doctrine applies is at that time of the accident and not at a later date.
The point is that it does not matter who was actually sued but who could have been sued.
The insured is determined by identifying who is covered under each insurance policy and if there is a potential defendant liable to the claimant who, if sued, could claim on either policy.
The court said that, by operation of relevant statutory provisions, the employer could have chosen to call upon either of the policies to indemnify it notwithstanding that it did not have a contractual relationship with the compulsory third-party insurer for the truck involved in the accident.
That meant that the doctrine of double insurance applied.
The judgment is worth a read if only for its comprehensive discussion on the doctrine of double insurance and what constitutes co-ordinate liability and a common insured.