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ARTICLE · 01 APRIL 2019

Insurance for class actions: the importance of an effective aggregation clause

Corrs Chambers Westgarth
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Insureds should consider from the outset how their policy will respond in the event of a class action against them.

AustraliaInsurance
Daniel Marquet
Daniel Marquet
Barbara Bell
Barbara Bell
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The recent decision of the New South Wales Supreme Court in Bank of Queensland Ltd v AIG Australia Ltd [2018] NSWSC 1689 (Bank of Queensland decision) highlights the importance of having a carefully worded and effective aggregation clause to provide adequate insurance cover in the event of a class action.

In this instance, the Bank’s policy had an aggregation clause, but the Court found that it was ineffective for the Bank. This meant the Bank had to pay a deductible for each claim in the class action which meant that it had no cover. The decision shows that aggregation clauses that are drafted to respond to a series of related claims may not allow for the aggregation of the multiple claims making up a class action.

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