Insurance broker Horsell International Pty Ltd ran a scheme for
members of the Professional Association of Diving Instructors,
underwritten by Liberty Mutual Insurance Company. The scheme
brochure stated that there was liability cover for boats less than
12 metres long.
A member of the scheme, while using a boat for recreational
purposes, collided with another boat. He was at fault and the
driver of the other boat was awarded damages for personal
The underwriter refused indemnity on the basis that the accident
did not occur in connection with the insured's business of
'scuba diving', and on the basis of an exclusion in respect
of liability arising from a 'criminal act or omission' (the
insured was charged with dangerous navigation occasioning grievous
The NSW Supreme Court read down the exclusion clause as
referring only to intentional criminal acts, so it did not apply.
However it also decided that, although the insured had mentioned
his diving business to the passengers in his boat, that did not
amount to a connection with his business and so his liability did
not fall within the operative clause of the policy.
However, the Court went on to decide that the broker owed a duty
of care to the insured and had breached it by not warning that
cover for liability arising out of the use of the boat was limited
to liability arising in connection with the insured's business.
Further the broker should have informed the insured that he could
get full liability cover by taking out protection and indemnity
cover attached to the hull insurance. Rian Lane Pty Ltd v Dive
Two Pty Ltd.
'Arising out of the business' is a real limitation on the
scope of public liability cover, and the way in which an insured
business is described in the policy is a potential trap for
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).