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ARTICLE · 05 OCTOBER 2016

When a calculated risk doesn't pay off: insurance policies and accidents

Clayton Utz
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The conduct of an insured may be negligent, but may still be "accidental, sudden and unforeseen" and covered by a policy.

AustraliaInsurance
Mark Waller
Mark Waller
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A negligent decision made with an appreciation of the risk can still be an "accident" and covered by insurance, but it can be difficult to assess when the line is crossed and the conduct and the loss/damage is no longer accidental.

We all take calculated risks from time to time, but what if we do so negligently, and that risk eventuates? Is any damage or loss the result of an accident or not? This is an important issue for both insurers and policy holders, but not always one with a clear answer. There has now been some guidance from the Queensland Court of Appeal, which found in favour of an insured when the materialisation of a known and appreciable risk was considered to be an "accident" and "accidental damage" (Matton Developments Pty Ltd v CGU Insurance Limited [2016] QCA 208).

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