The industry ombudsman has backed an insurer in a dispute over dual insurance, after a property owner accidentally doubled up on home and contents policies.

Its decision hinges on section 76 of the Insurance Contracts Act, which says when two or more policies cover one risk, the insured can recover “from either or all insurers” an aggregate amount that reflects only the loss suffered.

The dispute involved a man who held home and contents cover with Suncorp, then switched to a policy with another insurer but forgot to cancel the original cover for about 18 months.

The homeowner said he was unaware he was still paying Suncorp because emails from the insurer – including automatic renewal reminders – went to his junk folder.

When he finally cancelled the Suncorp cover, he asked for a full refund for the 18 months, but Suncorp offered only half – just over $1000.

The complainant wanted the Australian Financial Complaints Authority to order that the other half be repaid, arguing Suncorp “bore no real risk” during the 18-months spell.

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“I disagree with this submission,” an AFCA ombudsman said. “While the complainant says he did not make a claim against the insurer during that period, that does not mean the insurer was not on risk.”

The complainant said he claimed against the other insurer during the dual-cover period, but AFCA notes “he was not restricted from making a claim under [Suncorp’s] policy, particularly if the policy offered by [the other insurer] did not respond to his claim”.

Under section 76 of the act, the other insurer was technically entitled to recover part of its liability to the complainant if Suncorp’s policy also covered the risk, the ombudsman says.

“Because there were two insurers on risk for the home, it is likely that any potential liability [Suncorp] would have under the policy would not exceed 50% of the loss.

“Accordingly, the insurer’s offer to refund 50% of the premium, and retain the remainder to reflect its likely liability, is fair in all the circumstances.”

See the ruling here.