In April 2025, the English High Court handed down its decision in Watford Community Housing Trust v Arthur J. Gallagher Insurance Brokers Limited [2025] EWHC 743 (Comm). The Court found the insurance broker liable to pay up to £5 million for failing to notify all of the plaintiff’s insurers of a claim promptly.
The insurance broker, Gallagher, admitted that it was negligent, but argued that its breach of duty had not caused any loss. This was on the basis that each of the insured’s three insurance policies contained double insurance provisions which, Gallagher said, had the effect of limiting the total indemnity recoverable to less than the amount insurers had agreed to pay. The High Court was asked to rule on this defence as a preliminary issue.
The judgment is of interest because it throws light upon brokers’ duties to notify insurers as well as the complexities of claims where there is double or triple insurance.
Background
In March 2020, a staff member of Watford Community Housing Trust (WCH) sent an email to 3,167 recipients, accidentally disclosing sensitive information about over 3,500 of WCH’s tenants and employees. This included information about individuals’ sexual orientation and ethnicity. It resulted in an immediate backlash. 1,136 complaints were made. WCH considered that 1,050 of these were valid claims which it either settled or was attempting to settle when it asked its broker to assit it to make an inusrance claim for its liabilities arising from the breach.
WCH had three separate insurance policies which provided cover in respect of losses from data breaches:
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£1 million of cover under a cyber insurance policy, underwritten by PEN Underwriters, on behalf of various Lloyd’s syndicates;
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£5 million of cover under a “Combined” policy, underwritten by QBE; and
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£5 million in professional indemnity (PI) cover, underwritten by Hiscox.
Following the data breach, WCH’s broker, Gallagher, advised it to notify only PEN of a claim. It failed to advise WCH to notify either QBE or Hiscox, with the effect that they were not notified until after the expiry of cover under the Combined and PI policies.
Both QBE and Hiscox initially declined cover. QBE subsequently agreed to provide cover and to indemnify WCH up to its £5 million policy limit. This meant that the total amount of cover available to WCH was £6 million, however WCH anticipated that its losses would exceed that sum.
Gallagher’s defence was, essentially, that the maximum amount of cover available to WCH across all three policies was £5 million, on the basis that:
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On a literal reading, the “other insurance” clauses in each of the three policies made each contract of insurance an excess policy, such that WCH did not have any primary cover. Given that would be absurd, these clauses should cancel each other out, leaving WCH with triple insurance providing horizontal layers of primary cover of £1 million, £5 million and £5 million.
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Had all of the insurers been notified, the maximum total indemnity to which WCH would have been entitled was limited to £5 million, even if its total loss exceeded that. This was on the basis that the “other insurance” clauses had the effect that the maximum total indemnity could not exceed the highest limit in the horizontal layer of primary cover.
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As WCH had an indemnity of £6 million, it had not suffered any loss.
The High Court judgment
The High Court ruled in favour of WCH. The Court agreed with WCH that the three “other insurance” clauses cancelled each other out, meaning WCH held triple insurance providing horizontal layers of primary cover of £1 million, £5 million and £5 million. The Court went on to find that in such a case, an insured may claim against any or all of 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 more of the others. Importantly, this gave WCH a total of £11 million of cover.
In reaching this view, the Court distinguished a line of authorities relating to contribution between insurers where there is double insurance. The Court held that where there is double or triple insurance, the insured may recover, at most, the amount representing their actual or agreed loss up to the amount of each policy, so that if the insured is over-insured, part of the total sum insured will not be recoverable. However, an insured can choose how to make up his or her indemnity so that, subject to each policy indemnity cap, the insured may pursue the insurers in such order and for such proportions of the loss as the insured sees fit. It is then for insurers to settle their respective liabilities between themselves, when the usual contribution rules apply.
The Court also considered an argument made by Gallagher that the policies restricted the plaintiff’s total indemnity. While the Court, there was insufficient wording in any of the policies for such a restriction to have effect in this case.
Key takeaway
This case serves as a reminder to insurance brokers that, where a client holds multiple insurance policies which may respond to the same event, all insurers ought to be notified of a claim, because the client may be entitled to the benefit of all of the policies. This is necessary to ensure that the maximum amount of coverage is available. A failure to do so can be costly.
This article was co-authored by Sione Roberts, a Solicitor from our Litigation team.
