The assured is not prohibited by law from effecting as many policies as he pleases on the same subject-matter and against the same risk, and the existence of several policies at the same time does not affect the validity of the individual insurances, though his rights under any particular policy may, in the event of a claim arising, be modified.
The usual question in the proposal form as to ‘other insurance’, though it requires the proposed assured to disclose not only insurances as exist at the time of answering the question, but also any further insurances which he may effect between the date of answering and the issue of the policy, extends no further and does not impose on him the duty of informing the insurers of any insurances effected after the issue of the policy.
1. Express conditions relating to ‘other insurance’
The policy may, however, contain a condition requiring any such insurances to be notified. Such a condition is either a condition subsequent of the policy, providing that a failure to notify is to avoid the policy, or a condition precedent to the liability of the insurers, providing that no claim is to be valid in the absence of notification.
The notification of other insurances is usually required by the condition to be indorsed by or on behalf of the insurers. The necessity for indrosement may, however, be waived.
The duty imposed by the condition of notifying other insurances does not involve the duty of notifying the insurers that an existing policy has been allowed to lapse. This duty may, however, be imposed by an express condition.
2. What constitutes ‘other insurance’
To constitute ‘other insurance’ within the meaning of the condition:
a. The other policies must be intended to cover the same risk as that covered by the policy containing the condition.
b. The other policies must be valid and subsisting contracts of insurance.
c. The other policies must be additional insurances.
(a) Same risk
The policies must be intended to insure the same interest in the same subject-matterand the same peril. A subsequent insurance which, in certain contingencies only, may cover a portion of the same risk and which involves the mere possibility of an accidental overlapping, is not ‘other insurance’ within the meaning of condition.
(b) Valid and subsisting policies
It is not necessary that formal policies should have been issued. The issue of a cover note or the entry into a binding contract of insurance is sufficient. On the other hand, there is no ‘other insurance’ within the meaning of the condition if the other insurances was never completed, and it is immaterial that a formal policy was issued if it is, in fact, void or is treated by the parties to it as void.
(c) Additional insurances
The condition has no application where an existing policy which is allowed by the condition is renewed or replaced by another policy issued by different insurers. The duty of notifying the change of insurance may, however, be imposed by an express condition.