A public liability insurance policy covers a business against a range of risks with the main risks being property damage or personal injury to another person through negligence or faulty workmanship.

I paid good money to buy insurance – what do you mean the insurer can deny my claim?
All public liability policies will have exclusions. Some exclusions are common to every public liability policy, while other exclusions are specific to a particular policy. Usually, public liability policies do not cover the following events:

  • Any deliberate act to cause damage or injury;
  • Any unlawful activity;
  • Property damage suffered by the policyholder or its employees;
  • Personal injury suffered by the policyholder or its employees.

A claim on a public liability insurance policy is formal notification to the insurance company that the insured has suffered a loss or damage that they believe is covered by the policy and they are requesting the insurance company take action (i.e. defend a court claim made against the insured or make a payment under the policy).
When a claim is made on an insurance policy by the insured the insurance company will review the claim to see if it is a genuine claim and if the event or circumstances of the claim are risks covered by the terms and conditions of the policy.

The insurance company may deny the claim for several reasons. If the insurance company denies the claim that denial must be in writing.

Common reasons why insurance companies deny claims include:

  • Policy exclusions – the insurance company may decide that the policy does not cover the loss because an exclusion clause applies to specific situations, circumstances or events described in the claim.
  • Conditions and responsibilities – the insurance company may decide that it is prejudiced because the insured has failed to comply with a condition outlined in the insurance policy.
  • Cancellation of the policy – the insurance company may have cancelled the policy during the period of insurance cover because the insured has not paid the premium, or the insurance policy has not been renewed. If so, the insured may not be able to make a claim.
  • Non-disclosure – the insured is obliged to provide accurate and comprehensive information to the insurance company about anything that might affect the insurance company’s risk when the insured takes out or renews the policy. A failure to disclose information may affect the insured’s ability to claim on the insurance policy.

Disputes between the insurance company and the insured can arise when the insurance company decides to deny the insured’s claim and the insured disagrees with the decision.

What can I do if the insurer denies my claim?
Under Australian law, insurers must have an internal complaints process available within the insurance company. Any insured who is unhappy with the decision of an insurance company on its claim under a public liability policy can request that the insurance company internally review the case. Usually, this request is made in writing to the Internal Dispute Resolution (IDR) Department of the insurance company.

The General Insurance Code of Practice 2014 (Code) sets out the standards that insurance companies must meet and requires insurers to be open, fair and honest in dealings with customers. It also provides the timeframes for insurers to respond to claims and complaints. Upon receiving the complaint, the insurance company will appoint a person who has decision-making authority to review the case. Usually, this person will respond to the complaint within 15 business days and will make a final decision within 45 calendar days.

If the insurance company’s decision is unchanged on review, then this will leave the policyholder in the position where they are uninsured in respect of the claim made against them for property damage or personal injury through negligence or faulty workmanship.

It is important that the policyholder speak to a lawyer and obtain legal advice about the prospects of successfully taking legal action against the insurance company. The team at MV Law have a long and successful history of acting for uninsured defendants in relation to disputes with public liability insurance companies.

If you are involved in a dispute with your public liability insurer the talented Dispute Resolution Team at MV Law can assist you.

For more information, contact the Dispute Resolution Team:

Alisa Taylor                      Partner                          Litigation and Dispute Resolution
(02) 6279 4388                   Alisa.Taylor@MVLawyers.com.au

Courtney Noble              Associate                        Litigation and Dispute Resolution
(02) 6279 4366                   Courtney.Noble@MVLawyers.com.au