Allianz Australia Insurance Limited v AIG Australia Limited

• Jurisdiction: Australia Federal only
• Court: Federal Court (Australia)
• Judgment Date: 17 September 2026
• Neutral Citation: [2026] FCA 1357
• Date: 17 September 2026

Federal Court of Australia

Allianz Australia Insurance Limited v AIG Australia Limited [2026] FCA 1357

File number:	VID 1628 of 2025
Judgment of:	DERRINGTON J
Date of judgment:	17 September 2026
Catchwords:	INSURANCE – double insurance – equitable contribution between insurers – whether “Difference in Conditions” (Other Insurance) clause operates to deny indemnity in respect of same liability – meaning of “Named Insured” and “Insured” – whether “Named Insured” in Difference in Conditions clause should be read as “Insured” – construction of policy schedule and definitions – application of clause permitting departure from defined meaning where clearly inapplicable – correction of obvious drafting error by construction – absurdity and commercial sensibility – no double insurance – no entitlement to equitable contribution
Legislation:	Insurance Contracts Act 1984 (Cth)
Cases cited:	Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342 Allstate Explorations NL v Blake Dawson Waldron (2010) 16 ANZ Ins Cas 61-847 Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101 Chubb Insurance Australia Ltd v WSP Structures Pty Ltd [2024] FCAFC 123 Nuix Ltd v Berkshire Hathaway Specialty Insurance Co [2025] FCA 1002 Onley v Catlin Syndicate Ltd (2018) 360 ALR 92 QBE Insurance (Australia) Ltd v Allianz Australia Ltd (2020) 377 ALR 338 Sayers Property Holdings Pty Ltd v AIG Australia Ltd [2025] VSCA 294 Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317 WSP Structures Pty Ltd v Liberty Mutual Insurance Company t/as Liberty Specialty Markets [2023] FCA 1157 Zurich Australian Insurance Ltd v GIO General Ltd [2011] NSWCA 47 Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pte Ltd (2007) 209 FLR 247 Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pte Ltd (2009) 240 CLR 391
Division:	General Division
Registry:	Victoria
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs:	91
Date of hearing:	17 July 2026
Counsel for the Applicant:	Mr PG Cawthorn SC with Mr J Harris
Solicitor for the Applicant:	Sparke Helmore
Counsel for the Respondent:	Mr HL Redd SC with Ms H Douglas
Solicitor for the Respondent:	Clyde & Co

ORDERS

		VID 1628 of 2025
BETWEEN:	ALLIANZ AUSTRALIA INSURANCE LIMITED Applicant
AND:	AIG AUSTRALIA LIMITED (ACN 004 727 753) Respondent

order made by:	DERRINGTON J
DATE OF ORDER:	17 september 2026

THE COURT ORDERS THAT:

1. Question 1(a)(i) is:

Does Condition 17 of the AIG Policy (the Difference in Conditions clause) apply in the circumstances of this case, to the effect that AIG was not obliged to indemnify Built Tech for any part of the Claimant’s Claim or the VWA Claim?

Answer: Yes.

2. Question 1(a)(ii) is:

Does Condition 17 of the AIG Policy (the Difference in Conditions clause) apply in the circumstances of this case, to the effect that there is no double insurance entitling Allianz to any equitable contribution from AIG to the indemnity payments made by Allianz to Built Tech?

Answer: Yes.

3. It is unnecessary to answer the remaining questions.

4. The application is otherwise dismissed.

5. The applicant is to pay the respondent’s costs of and incidental to the application to be taxed or as agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1. In these proceedings, the applicant, Allianz Australia Insurance Limited (Allianz), seeks equitable contribution from the respondent, AIG Australia Limited (AIG), in respect of indemnity payments made by Allianz to Built Tech Hoardings Pty Ltd (Built Tech). The contribution is sought on the basis that Built Tech allegedly held “double insurance” pursuant to policies issued by both Allianz and AIG.

2. The central issue concerns the construction and operation of a “Difference in Conditions” clause (often referred to as an “Other Insurance” clause) in a policy of annual public liability insurance issued by AIG (the “AIG Policy”). If it applies, the indemnity provided by that policy to Built Tech is reduced to excess cover only in respect of any loss which is not covered by another policy. On that basis, there would be no double insurance of the loss which Allianz has indemnified and, in turn, no obligation upon AIG to pay any equitable contribution. Conversely, if the clause does not apply, AIG will be co-ordinately liable to indemnify Built Tech in respect of the loss and, therefore, required to contribute to the indemnity previously provided by Allianz.

3. The prima facie and natural meaning of the Difference in Conditions clause is that it operates in relation to those who fall within the defined scope of the term “Named Insured”. An ordinary reading of that term suggests that Built Tech would be so characterised, such that the Difference in Conditions clause applies to limit the AIG Policy to cover excess liability only, thereby excluding the possibility of double insurance.

4. However, in the first instance, both parties submit that the natural and ordinary meaning of the AIG Policy’s terms should not be accepted. Allianz asserts that, properly construed, Built Tech is not a Named Insured, such that the Difference in Conditions clause does not apply. Conversely, AIG submits that the term “Named Insured” should be read as “Insured” for the purposes of the Difference in Conditions clause, such that it applies to Built Tech even if it cannot be characterised as a Named Insured. That construction is also preferable for AIG because it substantially narrows the scope of the indemnity generally provided under its policy, given it would operate only as an excess policy in the event that any insured is covered by other insurance. Alternatively, AIG contends that, even if the Difference in Conditions clause operates only in relation to the Named Insureds, Built Tech nonetheless falls within the meaning of that term.

5. Both parties recognise that the AIG Policy, which appears to be a broker’s policy, is poorly drafted and contains several infelicitous expressions. Those criticisms are not without foundation. Indeed, there are many deficiencies in, and misuses of, the defined terms throughout the AIG Policy which give rise to several constructional difficulties. However, whilst the Court must take account of the imprecise manner in which the policy was prepared, that does...