London High Court Decision Highlights Broker Duties and the Reach of “Other Insurance” Clauses

A recent High Court judgement in London has sent a strong message to insurance brokers about the consequences of failing to provide comprehensive advice, while also offering new guidance on how overlapping insurance policies interact. The case, involving a leading insurance broker and a community housing trust (“the trust”), is likely to have a lasting impact on the insurance sector in the UK and beyond.

Incident and Insurance Arrangements

The dispute arose after a significant data breach occurred at the trust in March 2020, when an employee mistakenly sent out a spreadsheet containing sensitive personal information—such as sexual orientation and ethnicity—of thousands of tenants and staff. The breach triggered over a thousand complaints and exposed the trust to potential liabilities exceeding £6 million.

At the time, the trust was covered by three separate insurance policies, all arranged by the same broker:

• Cyber insurance with a £1 million limit;
• Combined general liability insurance with a £5 million limit; and
• Professional indemnity insurance with a £5 million limit, plus defence costs.

The broker’s advice was to notify only the cyber insurer. By the time the other insurers were approached, the window for timely notification had closed. This led to one insurer declining cover and another eventually paying out.

Court’s Findings: Policy Construction and Broker Responsibility

The broker admitted to both negligence and breach of contract, but argued that the trust suffered no financial loss. The broker’s main argument was that the “other insurance” clauses in the policies meant each would only provide cover if the others did not, effectively cancelling each other out. The broker also claimed that, at most, the trust could only recover up to the highest single policy limit.

The court disagreed. The judge concluded that the “other insurance” clauses could not be interpreted in a way that would leave the insured without any primary cover. Instead, the judge determined that the policies should be seen as providing a cumulative layer of protection, allowing the trust to claim up to the total combined limits of all three policies—£11 million in this case.

The judgement also confirmed that, unless a policy specifically includes a clause requiring losses to be shared proportionally between insurers, the policyholder is entitled to choose how to claim under multiple policies.