ARTICLE · 10 APRIL 2026

“The brothel failed in its duty of disclosure, so its fire insurance policy is invalid.” Which case won?

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Under Australian law, prior to entering into an insurance contract, an insured has a duty to disclose to the insurer any relevant matter that a reasonable person in the circumstances could be expected to know to be relevant.

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George Koimanos

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The Facts

Owner of brothel makes claim on fire insurance policy following fire

A NSW case heard in the Supreme Court and then the Court of Appeal concerned a dispute over whether an insurer was obliged to pay out on a fire insurance policy.

On 1 January 2012, there was a fire in a brothel which was run from premises in the Australian Capital Territory. The extent of damage from the fire was such that the brothel had to cease trading.

The brothel was insured under a specialised Adult Industry Insurance Policy, which provided cover against property damage, including by fire, and public and product liability.

The insurance was initially issued for the period 3 September 2010 to 3 September 2011 and subsequently renewed for 12 months to 3 September 2012.

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