A composite policy is a policy which comprises in one document the interests of a number of persons whose connection with the subject matter of the insurance makes it natural and reasonable that the whole matter should be dealt with in one policy.

It is commonplace for reasons of commercial convenience to insure the interests of a number of insured persons under one policy usually because it concerns properties or projects in which they are all interested or because they are all companies within one corporate group which can obtain insurance more effectively and cheaply through a single policy than by individual negotiation of separate policies.

See New Zealand Fire Service Commission v The Insurance Brokers Association of New Zealand Inc [2015] NZSC 59 and MacGillivary on Insurance Law (14th Ed) at 1-202.

Where a contract of insurance is composite in nature with there being more than one insured each insured is insured separately with all the consequences which flow from that in terms of the cover including the limit of indemnity provided. The rights of the insured parties may have to be determined in the light of their underlying relationship or agreement [see a previous blog on CAR policy and subrogation here]

Parties to a composite policy should be mindful of the consequences for the different insureds and separate interests which underpin the composite policy and should preferably deal with those expressly in the wording to avoid debate.