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ARTICLE · 21 DECEMBER 2022

High Court finds that utmost good faith does not bind insurer to coverage representation

Gilchrist Connell
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Recent decision guides insurers on the potential boundaries of the duty of utmost good faith in the context of claims assessment.

AustraliaInsurance
Dan Robinson
Dan Robinson
Claudio Trovato
Claudio Trovato
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In the recent decision of Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2022] HCA 38, a majority of the High Court found that the duty of utmost good faith did not prevent an insurer from resiling from a representation that it would not rely on its rights in respect of pre-contractual non-disclosure in the context of communicating about coverage with respect to a claim.

The decision provides important guidance to insurers on the potential boundaries of the duty of utmost good faith in the context of claims assessment and handling. The guidance is welcomed given the recent activity of ASIC taking action against insurers to seek declarations and penalties for breach of the duty.1

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