The High Court has confirmed that carefully worded “other insurance” clauses are not voided by the Insurance Contracts Act 1984 and can in some circumstances be used by insurers to void double insurance claims.

Last week the court dismissed Zurich Australian Insurance’s appeal – the first of three related to the same issue – in a closely followed case, Speno Rail Maintenance v Metals & Minerals Insurance (and two others).

DLA Phillips Fox says the court confirmed section 45 of the Act doesn’t apply to provisions in insurance contracts which purport to exclude or limit liability where the insured is not a party to another contract of insurance but rather is only named in it as an insured person.

The dismissal of Zurich’s appeal led to the consequential dismissal of Metals & Minerals Insurance’s and Hamersley Iron’s related appeals.

DLA Phillips Fox says insurers should continue to consider measures encouraging claimants 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.

While contractors are often required to take out insurance on behalf of principals even though principals have taken out their own insurance, “a carefully drafted ‘other insurance’ clause in the principal’s insurance policy will enable its insurer to avoid double insurance claims made by a contractor’s insurer”.