preview

Tony 's Property Of Premiums Under The Menzies ' Policy

Better Essays

Given a fire has destroyed Tony’s property on the 12th July, whether Tony can successfully claim on the Whitlam’s insurance policy put in place on the 7th July, requires a consideration of the insurance policies which may cover the premises at the time of the fire.

1. Menzies’ Policy

The late payment of premiums under the Menzies’ policy was a failure by Tony to comply with a term of the insurance contract, thereby entitling Menzies to terminate the contract under s61(d) of the Insurance Contracts Act 1984 (Cth) (ICA).

To terminate the contract Menzies needs to also comply with the cancellation procedure of s59 ICA which requires at least 3 business days’ written notice of cancellation. As 14 days’ written notice was given, this …show more content…

2.1 Duty of Utmost Good Faith

On the facts presented, given the absence of fraudulent, dishonest or unreasonable conduct by Tony, it is hard to see how it could be argued that he has breached his duty of utmost good faith as that provision applies in the pre-contractual setting per s13 ICA, in a manner other than breaching his duty of disclosure discussed below. Accordingly should Tony be in breach of his duty of disclosure he will likely to have breached his duty of utmost good faith as well.

2.2 Duty of Disclosure

An applicant for insurance has a pre-contractual general duty of disclosure under s21(1) ICA, which requires them to disclose all matters known to them which either:

a) they know to be relevant to the risk to be insured against; or

b) a reasonable person in the circumstances would otherwise know would be relevant.

Whitlams has an obligation under s22 ICA to clearly inform Tony of the nature and effect of this duty of disclosure in writing prior to the contract of insurance being entered into. On the facts presented Whitlams have done this with the requisite clarity: with headings appearing in upper case so as to draw attention to them; the content summarising the relevant statutory provisions including consequences of failure to comply; and otherwise contained as part of the

Get Access