Boardroom Briefing | November 2020
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  NSWCA 190