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22 September, 2021 | Nathan Tetzlaff
Insurance is a contractual arrangement. Therefore, if the contract for insurance allows the insurer to refuse cover (also known as an exclusion clause), they may invoke that exclusion to avoid making payments. There are many types of exclusion clauses, some that seem more reasonable than others.
Insurance law recognises this issue and seeks to protect insured parties from arbitrary exclusion clauses. Insurers are not permitted to refuse cover by relying on an exclusion clause if it can be shown that the excluded circumstances did not cause or contribute to the loss. For example, suppose that:
Assuming you are faultless in the accident, can the insurer rely on the valid licence exclusion to refuse cover?
No, generally the insurer cannot refuse cover on that basis where the lack of a valid licence did not cause or contribute to the loss and if you had carried a valid licence at that time, the accident still would have happened.
Many assume that once an insurer has accepted your claim that is the end of the matter. However, that is not the case.
When an insurer has covered your loss, the insurer is entitled to step into your position and make a claim against the person that caused the loss. This means that, you have an obligation not to act in a way that harms the insurer’s right to recover from the person who caused the loss. In most cases this means things like:
If you prejudice your insurer’s ability to recover its losses, the insurer may have a claim against you.
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