We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
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
injury.
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
bodily harm).
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
brokers.
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 Australian Stock Exchange Listing Rules 3.1, 3.1A and 3.1B, and Guidance Note 8 concerning continuous disclosure obligations came into effect on 1 May 2013.
Whereas most insurance policies exclude liability arising under contract, insurers can
positively benefit where an insured has limited or excluded its liability under contract.
This usually arises where the insured's contract has a limitation or exclusion of liability clause in the insured's favour.
