“Double insurance arises where the same party is insured with two (or, as is said to be the position in this case, more) insurers in respect of the same interest on the same subject matter against the same risks. It is common ground that, subject to the meaning of the other insurance clause in the PI Policy, that is the case here. There is nothing improper, let alone illegal, about double insurance. Many people have multiple life insurance policies. Double insurance against property damage or liability can occur by design (typically as a hedge against insurer insolvency) or inadvertently (typically where composite covers overlap with dedicated cover). However, it can also be an instrument of fraud (in the form of ‘double dipping’) if an insured takes out multiple policies and purposefully engineers an accident in order to make multiple claims for the same incident of loss.”

The question in this appeal dealt with the insured’s claim for damages from the broker for failing to advise the insured to make timely notification of a data breach under one of three available policies of insurance. 

The broker admitted negligence but contended that its breach of duty had not caused the insured any losses.  It argued on the basis that each of the three policies contained double insurance provisions, in the form of “other insurance clauses”, which had the effect of limiting the total indemnity recoverable by the insured to a sum less than that which the relevant insurers had agreed to pay. 

The insured argued that the broker’s analysis of the effect of double insurance was misconceived because it confused the insured’s right to an indemnity with the rights of contribution between those insurers. 

The judgment contains an especially useful discussion and analysis of “other insurance clauses” and the principles and application of double (and multiple) insurance.

The court found that, absent a rateable proportion clause in the relevant policies, in the case of double or multiple insurance the insured is at liberty to claim against its insurers in whichever order it wishes and, if it fails to recover the whole loss from one insurer, it can recover the balance from one or the others.

The broker’s no loss defence failed.

The court held that but for the broker’s negligence, the insured would have been legally entitled to recover an indemnity under the three policies in respect of the whole of the loss caused by the relevant breach up to a combined limit of £11 million.  The insured was entitled to damages from the broker in an amount equivalent to the losses that the insurers would have been legally liable to pay over and above £6 million that the insured had already recovered from the other insurers. 

In cases where it is clear that the insurer would have been legally liable to the insured but for the broker’s negligence, causation is established.

Appropriate factual and counter-factual enquiries as to what would or might have happened arise for consideration if the insurer’s legal obligations to the insured are in doubt and, in which case, any causal link between the broker’s breach of duty and its mandate may be broken.  Watford Community Housing Trust v Arthur J Gallagher Insurance Brokers Ltd [2025] EWHC 743 (Comm) (08 April 2025)