Within the last twenty-five years, approximately, a considerable transition has taken place in approaching the coverages of automobile policies. At one time, liability insurers used to require their policy-holders to pledge that they did not carry other insurance of like character. It is difficult to understand why this situation ever arose. It may have been an outgrowth of fire coverages, or health and accident provisions, in which a moral hazard actually might exist where excessive protection is carried. Thereafter, instead of making this a matter of warranty, policies frequently provided that in the event there should be any other valid or collectible insurance, the basic policy would be void. Let us suppose that a man had two such policies, each of which had a like provision of this character. Each then would attempt to disclaim liability because of the existence of the other contract. As we are all aware, not all of the insurance contract is written in the language of the policy; much of it is written by the courts when confronted with this situation. And, when confronted with this problem, their answer was succinct: "Gentlemen, this is ridiculous. A man who pays for two policies should not wind up with none. These provisions are mutually repugnant; we will hold you both liable, and you may share the risk." In the event one policy was for $20,000 and another for$5,000, such companies would usually wind up dividing the risk proportionately, the company having the larger risk bearing its fair proportion of the loss. Probably the major problem in policy construction in this area which we have had in recent years has arisen through the overlapping features of the omnibus clause and the drive-other-cars provisions.
John A. Appleman,
Overlapping Coverages in Liability Contracts; Subrogation,
13 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol13/iss4/3