In the construction industry, contractors are often requested to
provide insurance cover for every interested party on the
There are differences between being a named insured compared
with being merely noted as an interest on a policy. If a party is a
named insured, it is known as a co-insured under the policy and it
effectively has the same rights and obligations under the policy as
the principal insured. In contrast, an interest noted might enjoy
some benefits of being covered but not share all of the rights and
obligations that a named insured would have. Both the named insured
and an interest noted can make a claim on an insurance policy.
Section 48 of the Insurance Contracts Act 1984 (Cth)
(ICA) entitles an interest noted to make a claim
on the policy for a loss where a party is specified as covered by
the policy. However, s48 of the ICA does not go as far as making an
interested party an insured under the policy.
Insurers can rely on an insured's conduct before the policy
was incepted in defending a claim for indemnity. If the principal
insured has made a misrepresentation before the policy commenced
and/or breached its duty of disclosure owed to the insurer, courts
have accepted that the insurer can refuse to indemnify the interest
noted claimant. However, where the principal insured's
deliberate act (e.g arson) causes the loss under the policy, courts
have held that insurers are not entitled to refuse to indemnify an
interest noted claimant.
In contrast, a named insured will not be contaminated by the
conduct of the principal insured where this occurs without the
named insured's knowledge.
The named insured also has the right to:
serve on an insurer, a notice requiring the insurer to admit
liability to indemnify the insured and advise whether the insurer
intends to manage a third party claim within a reasonable
demand a copy of the insurance policy; and
serve other notices under the Building Act.
However, a named insured also has the following duties and
to comply with the obligation to make disclosure of all matters
relevant to the insurer's decision to accept the risk and if
so, on what terms;
to inform the insurer of any change in circumstances which
increases the risk insured; and
to pay premiums.
An interest noted does not presently have the above rights or
The distinction between a named insured and an interest noted
may, in the future, be largely removed. However, until the law is
amended, a party is on balance, better protected if it is a named
insured rather than an interest noted.
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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