The High Court's decision today in Maxwell v Highway
Hauliers Pty Ltd [2014] HCA 33 reinforces that insurers will not be
permitted to rely upon drafting devices to refuse cover where a
failure to comply with a policy term had nothing to do with the
loss and did not prejudice the insurer's interests.
The decision is a victory for commerciality and policyholders
alike. However, policyholders must remain alert to the limits of
the decision which are noted below.
What does section 54 do?
Section 54 of the Insurance Contracts Act 1984 (Cth) has been a
frequent battleground of policyholders and their insurers. The
section was designed to safeguard against insurance cover being
frustrated by drafting devices used by insurers to deny liability
even in circumstances where a breach of a policy term had nothing
to do with the loss and did not prejudice the insurer's
interests.
