ARTICLE · 18 JULY 2017

Exclusion clauses in insurance policies cannot operate to make the contract a commercial nonsense

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Exclusion clauses cannot limit the field of cover of an insurance policy to defeat the commercial object of the policy.

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Mark Birbeck (Formerly With HBA Legal)

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Cate Doosey v Nigel Walsh & Complete Building Inspection Services Pty Ltd [2017] NSWDC 8

Key Points

The District Court of NSW determined that an exclusion clause relied upon by the insurer did not exclude an obligation under the policy to indemnify the building inspector for the claim.
The Court emphasised that exclusion clauses which impose an inappropriate limit on the promised field of cover under the policy will not be effective.

Background

Ms Doosey (the plaintiff) engaged Mr Walsh (the defendant) a professional building inspector, to conduct an inspection of a home that she was purchasing. The defendant reported that the home was in satisfactory condition and the plaintiff proceeded with the purchase in reliance on the report.

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