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ARTICLE · 15 JULY 2026

Broker Negligence, Hypothetical Cover And Section 54

Gilchrist Connell
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The Victorian Supreme Court has clarified the burden of proof in broker negligence claims, establishing that insureds must demonstrate a hypothetical insurance policy would have responded to their loss. This landmark decision examines the interplay between causation requirements, section 54 of the Insurance Contracts Act, alteration of use clauses, and broker renewal obligations in the context of a major warehouse fire claim.

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Alex Haslam
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The Victorian Supreme Court has clarified that insureds pursuing broker negligence claims must prove a hypothetical policy would have responded to the loss. The decision provides important guidance on causation, section 54 of the Insurance Contracts Act, alteration of use clauses, and broker renewal obligations.

In Danbol Pty Ltd v ACN 007 198 343 Pty Ltd [2026] VSC 305, the Supreme Court of Victoria has confirmed that a client alleging negligence by its broker for not placing an insurance policy on its behalf must establish that the policy that should have been placed would, on the balance of probabilities, have responded to the loss.

The decision provides important guidance on burden of proof, hypothetical indemnity claims, alteration of use clauses and section 54 of the Insurance Contracts Act 1984 (Cth) (ICA).

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