You've made it. After negotiating back and forth
with your insurance company you have agreed on an amount to settle
your insurance claim. Your claims manager says that they will send
you a settlement agreement for you to sign and the money will be
yours. Sounds so easy. Richard Lang and Janine Ballinger, of Duncan
Cotterill, look at the process.
The settlement agreement arrives and it is definitely more of a
legal document than you expected. While your insurance company has
agreed to pay what you expected, there may be lots of other clauses
in the agreement, there may be a statutory declaration, and it
comes with a warning to seek legal advice.
What do you do? You need to do exactly what your insurance
company has advised. You need to seek professional legal
The terms and conditions contained in the settlement agreement
depend on your circumstances, the level of damage to the property,
and the way the claim has been agreed to be settled. It is
difficult to compare your settlement agreement to your neighbours.
Differences in circumstances and policy entitlements mean that
little details can have a significant impact on your settlement
There are several issues to consider when you review the
settlement agreement, among other things:
What claim does the agreement relate to? Is the agreement in
settlement of all claims?
Is the settlement figure correct? Have the correct inclusions
or deductions been made? For example, EQC payments received,
insurance excesses, professional fees, consent fees, emergency
works, landscape allowances, outbuildings, driveways and
Who needs to sign? Does your mortgagee need to sign the
agreement or approve it? Does your insurance payment get paid to
you or your mortgagee?
What is the settlement date, i.e. when will you receive your
What insurance will be available for your home following the
payment? The agreements usually provide for your insurance to
either be cancelled in full or cancelled in relation to the damage
parts of your property. Can you obtain other insurance such as
on-going fire cover?
How do you get further insurance cover for your property? In
the case for a house that can be repaired, most agreements state
that they will reinsure your property when you can show the
insurance company that you have completed all of the required
repair works and you notify them that the works have been
Where you are rebuilding, will your insurance company offer
insurance for your new home?
What is your future liability regarding EQC settlements?
Usually if you receive any further payments from EQC that relate to
the building, those payments must be forwarded onto your insurance
company. Do you have to assign your EQC claims to your insurance
company? If so, check that land claims are excluded.
Who is liable for future demolition costs? Where a property is
deemed a rebuild such costs tend to stay with your insurance
company, but note that they are entitled to demolish as and when
they see fit. If this creates a problem you need to raise it with
them and see if a future date can be agreed to.
Who has the salvage rights? You or your insurance company?
What about your temporary accommodation allowance or storage
costs? Does your agreement specifically state that any unused
portion remains available for you to use?
Once you are satisfied with the agreement, it is time to sign.
Where a statutory declaration is required, you will need to see a
lawyer, notary public, justice of the peace or court official to
complete the declaration. A statutory declaration is a serious
document and it is a criminal offence to make a false statement or
declaration - penalties include imprisonment.
Statutory declarations usually concern the application of the
insurance money you are receiving. You need to be careful that the
declaration reflects your circumstances and your agreement with the
insurer e.g. whether you are declaring that you intend to repair
your property, reinstate your property, or purchase another
property to the value not less than your insurance settlement
You must comply with whatever terms and conditions your
insurance company has placed in the statutory declaration. If you
are not going to comply, you need to discuss this with your
Even though you are nearly through the insurance process, the
settlement agreement is really important and has far reaching
effects. Take the time to fully understand what you are signing and
seek professional legal advice as soon as you can.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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