Denied Indemnity
Turning denied indemnity claims into fair outcomes
It is not uncommon for individuals with valid insurance policies to make a claim and to be denied indemnity by their insurer.
There are several reasons why an insurer may refuse to indemnify an insured. Commonly, an insurer will claim that the insured had not disclosed relevant information when the policy was entered or renewed (for example pre-existing damage or the existence of prior claims) which if the insurer had known about, would have affected their decision to provide insurance.
However, the circumstances in which such refusals can be made are limited by the Insurance Contracts Act. Another common claim made by insurers is that the harm suffered was excluded under the policy. They may argue that the harm was suffered as a result of an act or omission of the insured, for example at the time the insured’s house was burgled the front door was unlocked.
Whether such a refusal is legitimate will depend on whether the exclusion clause applies to the balance of probabilities. If for example the door was unlocked but the thieves entered by breaking a window, the insurer has not been prejudiced by the insured’s omission and arguably the exclusion does not apply.
Less commonly, an insurer will refuse indemnity alleging the insured acted fraudulently, by entering or renewing the policy with an intention to deceive the insurer or acting with reckless indifference as to whether the insurer was deceived.
A claim of fraud is a serious allegation and will require the insurer to prove the insured’s intention or reckless indifference.
Depending on the circumstances of the individual claim, there may be grounds to dispute the insurer’s refusal to indemnify the insured. As such, when you receive notice from your insurer that they have made a decision to refuse to indemnify your claim, you should seek legal advice as to your options to dispute their decision.
Our team at Dormer Stanhope is experienced in all forms of dispute resolution and can assist throughout the entire process of your insurance dispute, from advising on your prospects of success to litigation where necessary.
If you or someone you know has been denied indemnity by their insurer, and you believe their denial is not fair, contact Dormer Stanhope today for a free initial consultation.
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How do I write my own will?Dormers does not recommend anyone writes their own will.
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Why should I have a will?If you don’t have a will, then you have no executor and therefore, no one is authorised to represent your estate once you die. An application for Letters of Administration can also cost thousands of dollars and there is complexity around the process. The other thing to remember is that someone you don’t even like or know could end up being your Administrator. If you leave a will, then you can say who manages your estate when you die.
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But I don’t have any assets, what’s the point in having a will?These days, everyone at least has superannuation so there is some risk that may fall within notional estate, in NSW at least. Most super policies also contain life insurance, which can be substantial. This can become part of your estate in some cases.
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What is testamentary capacity?In order for a will to be valid, the will-maker must have testamentary capacity. This means that the will-maker must: understand the nature of making a will and the effect of making a will understand, at least in general terms, the nature and extent of the property of which they are disposing be aware of those who might be thought to have a claim upon their testamentary bounty have the ability to evaluate and discriminate between the respective strengths of the claims of such persons
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Do I truly have testamentary freedom?You are free to set out your wishes and how you would like your assets to be distributed after death in a will. Such a freedom, however, is not absolute in Australia.
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What are mutual wills?Mutual wills can also be called mutual will contracts. Mutual wills form a legally binding contract between two people. It involves two wills being drafted in terms that both parties agree to, and it prohibits either party from revoking or amending their will unless the other party agrees. As a result, when one person dies, both wills can no longer be amended. See also: The Curious Case of the Mutual Will
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What is the difference between a “normal” will and mutual wills?Usually, normal wills are revocable. That means it can be cancelled and you can make a new one. However, mutual wills can only be revoked while both parties are still alive, have capacity, and when there is agreement between the parties. Therefore, mutual wills contain an express or implied agreement not to revoke the will after the death or incapacity of either party.
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What is an example of a mutual will?An example may be where a couple makes an agreement that when the surviving partner dies their property will go to a specified beneficiary. Another example may only deal with the will of one of the parties. For example, when a housekeeper agrees to work for free on the basis that their employer will leave the house and contents to them.
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When would I be involved in a mutual will?A common scenario is when you wish to gift your estate to your surviving spouse to ensure your wealth passes on to your children when your surviving spouse dies. A mutual will would ensure that when you die, your surviving spouse cannot amend or revoke the will. This means your children will become the “ultimate beneficiaries” of your estate. In another case, you may wish to gift your estate directly to your children without gifting anything to your surviving spouse. In such a case, a mutual will could prevent your surviving spouse from making a family provision claim against your estate.
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Are mutual wills confined to husbands and wives?No. Mutual wills can be made between any two people who wish to bind each other to an estate plan.
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What happens if one party breaches the mutual will?If your surviving spouse breaches the mutual will, you can reply on the mutual wills contract to obtain some type of compensation.
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Can you give me an example of how a mutual will would work?Imagine Clare and John are married. They each have a daughter from a previous marriage. They make wills to agree to leave their assets to each other. In such wills, they agree the estate of the surviving spouse would be equally divided between Clare’s daughter and John’s daughter. John dies a few years later and his estate passes to Clare. At the time of John’s death, Clare’s estate is held on a constructive trust. (Constructive trust is an arrangement where a person holds property as the owner for the benefit of at least one beneficiary). This means that Clare must deal with the assets in the estate in the way that was outlined in the mutual will.