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ARTICLE · 17 MARCH 2009

Making Your Mind Up: How Long Does An Insurer Need To Decide To Pay Out On A Claim?

Clayton Utz
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A recent decision sheds some light on how long an insurer has to make its decision on whether a policy responds without being liable to pay interest (McConnell Dowell Middle East LLC v Royal & Sun Alliance Insurance plc (No 2) [2009] VSC 49).

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Peter Mann
Peter Mann
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A recent decision sheds some light on how long an insurer has to make its decision on whether a policy responds without being liable to pay interest (McConnell Dowell Middle East LLC v Royal & Sun Alliance Insurance plc (No 2) [2009] VSC 49).

If a claim is payable, interest is likewise payable for "the period commencing on the day as from which it was unreasonable for the insurer to have withheld payment of the amount" (section 57 of the Insurance Contracts Act 1984 (Cth)).

Frequently from an insured's perspective there is enough information for the insurer to make a decision. From that of the insurer, however, there are still some areas of uncertainty. The crucial question therefore is how long that insurer can take to make its decision without becoming liable to pay interest.

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