Boardroom Briefing | November 2020

Boardroom Briefing sept

Sometimes we don’t want them to apply so that, as an insured, you can access multiple coverage limits. Sometimes we do want them to apply, so only one excess is payable across a number of related claims. Aggregation clauses – arguably the most argued clause in an insurance policy.

WHY DO WE CARE? It all depends on the facts of your claim/s and the specific wording of the aggregation clause in your policy. Depending on those facts and the policy wording, an aggregation clause can work in your favour as an insured or work in favour of the insurer. An aggregation clause anticipates the burden of an insured paying multiple excesses across multiple claims, to render an insurance policy virtually useless. This is particularly the case in a representative action, such as the Bank of Queensland class action, where the bank faced claims by over 190 investors which, at first instance, were held to be multiple claims attracting multiples of the $2M deductible that could not be aggregated under the policy.   On appeal and to the relief of the insured bank, the Court recognized the alternative scenario that the multiple claims arose out of a series of ‘related’ wrongful acts and so the claims were aggregated under the policy and only excess was payable. 

WHAT CAN WE DO? There is plenty of case law showcasing different policy wordings and potentially analogous factual backgrounds to make a case to an insurer as to why, or why not, an aggregation clause is triggered. It’s an exercise in looking at the whole picture by ‘construing the clause according to its natural and ordinary meaning, read in light of the contract as a whole, thereby giving due weight to the context in which the clause appears’. Your Lockton broker also must consider the kind of business insured because if the business makes, for example, multiples of a device then aggregation of potential claims reduces the exposure to multiple, sometimes crippling, excesses. Here you might be better served with a very wide aggregation clause such as “any claim or claims arising out of all occurrences consequent on or attributable to one source or original cause…”

IN BRIEF: Is it in your best interest to argue one claim and therefore one excess because the total amount of the claim is less than the sum insured? Or is it in your best interest to argue more than one claim if the total amount claimed is more than the sum insured to access the benefit of a separate sum for each claim albeit bearing the brunt of multiple excesses? Your Lockton broker is skilled at determining the ambit of the aggregation clause in question in the context of the facts of the claim.  Sometimes it’s a matter of negotiating a compromise with the insurer as to how many claims there are and how many excesses to be paid. 

Bank of Queensland Ltd v AIG Australia Ltd [2019] NSWCA 190

Similar articles

retirement plans

Creating tailored retirement plans for the workforce

As life expectancy continues to rise worldwide and everyone ages at a different pace, companies are looking to create tailored retirement plans that address both the preferences of employees and the needs of the company.


Construction crisis

Is the Construction Industry facing a crisis and who will be left picking up the bill?

MACA Cancer 200

Lockton Australia Rides for Research

Lockton Companies Australia (LCA) is delighted to continue its support of the Harry Perkins Institute of Medical Research (the Perkins), by participating once again in the MACA Cancer 200 Ride for Research (formerly Ride to Conquer Cancer).

Lockton Global Benefits Forum

COVID-19 Vaccination Mandates: The Collision of HR Law and WHS Law

Last month, Lockton Australia’s Employee Care Manager, Morag Fitzsimons led a conversation with industry leaders as part of Lockton’s 2021 Global Benefits Forum.