Where is the ‘Location Insured’
The Full Federal Court of Australia has recently looked at the meaning of the expression ‘location insured’ in circumstances where an insured was seeking indemnity for damage to road works suffered as a result of unusually excessive rainfall and flooding.
The relevant Construction Risks – Material Damage Project Insurance Policy excluded cover for such damage unless the rainfall was unusual in its volume and intensity. Matters of rainfall volume and intensity had to be determined by the records kept at the weather station closest to the ‘location insured’. As the weather stations near the project works recorded different levels of rainfall, if any rainfall at all, it was important to determine whether the ‘location insured’ was where the damage had occurred or the overall project site.
The Full Federal Court determined that the correct interpretation of the expression ‘location insured’ was the location where the damage had occurred rather than the location of the projects work as a whole. It was therefore the records of the weather station closest to where the damage had occurred that would determine whether the rainfall was sufficiently intense to bring the claim within the terms of the policy.
Unfair Contract Terms
Readers to these updates will recall that the Insurance Contracts Act has recently been amended to expose contracts of insurance to the Unfair Contract Terms regime in Australia. Recent proceedings commenced by the Australian Securities and Investments Commission against Auto & General Insurance Company earlier this month ASIC Announcement, demonstrate the new world and the potential risks which insurers must now face.
In November last year, the former Federal Government passed legislation amending the Unfair Contract Terms regime in Australia. Those amendments commence on 9 November 2023. As that is just six months away, it is worth summarising again some of the significant changes for the insurance industry.
The introduction of a wider range of contraventions where contracts of insurance are found to contain unfair terms.
An expansion of the types of contracts falling within the regime’s boundaries.
A significant increase in the personal and corporate penalties for breach of the relevant legislation.
All of this kicks in in six months so attention should be given to policy wordings quickly.
Mark Sheller
Principal | Sheller
SHELLER | Clarence Chambers | Level 13 | 111 Elizabeth Street | Sydney NSW 2000 | Australia
Insurance & Commercial Law contact@shellerlegal.com | www:shellerlegal.com
DISCLAIMER This newsletter is intended to provide a general summary only and does not purport to be comprehensive. It is not, and not intended to be, legal advice. © Sans Limitations Services Pty Limited
Edition 4 - April 2023
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