The recent New South Wales Court of Appeal decision of Zurich Australia Insurance Ltd v GIO General Ltd [2011] NSWCA 47 (Zurich v GIO No 2) provides further clarification of the principles to be applied when determining whether double insurance exists and, accordingly, whether contribution is required between insurers. 

In this case, Zurich was successful in claiming contribution and overturning the first instance decision where it was held that as the liability to pay damages had not crystallised, no double insurance existed (Zurich v GIO No 1).  Please see our previous alert for a summary of the first instance decision.


The case concerned a bus driver employed by Tiger Tours who was injured when lifting a luggage compartment door on a bus trailer that was owned by an associated company, Caringbah Bus Service.  Under a workers compensation policy GIO indemnified Tiger for payments made to the driver in accordance with the Workers Compensation Act 1987 (NSW) (WC Act) as well as for any other damages Tiger became liable to pay.

In a District Court action, the bus driver succeeded against Caringbah for breach of a duty of care and was awarded damages under the Motor Accidents Compensation Act 1999 (MAC Act).  Zurich was Caringbah’s CTP insurer and was liable to pay the full amount of damages.  The interaction between the WC Act and the MAC Act meant that Zurich was compelled to reimburse GIO for all workers compensation payments made to the driver.  Zurich discharged its duty to pay the proper amount of damages to the driver but declined to reimburse GIO.  Zurich then sought contribution from GIO, claiming that there was double insurance.

NSWCA position - contribution available where loss is hypothetical

The appeal court unanimously overturned the first instance earlier ruling that there was no double insurance in the circumstances.  Contrary to the earlier decision, it was held that there was no need for liability to have actually crystallised under both policies.  Rather, the correct reading of the principle of double insurance is that an entitlement to contribution will arise if there is a common burden to indemnify at the time of the loss.  This affirms the principle initially set out in AMP Workers Compensation Services (NSW) Ltd v QBE insurance Ltd [2001] NSWCA 267 that the principle of double insurance does not require for there to be a ‘crystallised’ liability.

The court found that at the time of the injury to the driver, both the GIO and the Zurich policy would have responded in the event that the driver had chosen to sue either Tiger or Caringbah as the owner of the bus.  It did not matter who the actual owner of the bus was found to be at a later date, nor did it matter that the driver did not choose to sue Tiger for damages in the initial proceedings.

Importantly, contribution may be sought where at the time of an injury or loss there are different policies (CTP and Workers Compensation) that compel different insurers (Zurich and GIO) to indemnify different policy holders (Caringbah and Tiger) in respect of different liabilities (damages owed by Caringbah as owner and damages owed by Tiger as owner).


This decision has come in the wake of much uncertainty on the topic of co-ordinate liability and double insurance.  It confirms that the court’s discretion to award contribution is robust and flexible.  Furthermore, contribution may be awarded in factual scenarios where its application promotes the equitable rationale underlying the law of double insurance.