An insurance agent who denied claims from a Perth trucking company due to its lack of driver training has lost an appeal in the High Court.

The representative of various Lloyd’s underwriters Matthew Maxwell invoked exclusion clauses on claims for repair or replacement of damaged vehicles, saying Highway Hauliers failed to comply with driver test requirements.

But the High Court has upheld an earlier WA Court of Appeal ruling that the drivers’ training status did not contribute to losses.

Highway Hauliers was refused payouts on two accidents in 2004 and 2005.

It sued the insurers for indemnity against repair costs for the trucks and trailers involved, and also claimed damages for breach of the contract of insurance for the loss of profits for not being able to use the damaged trucks.

The company’s motor insurance policies stated drivers were required to, among other things, be at least 28 years old and have three years’ experience driving B-double trucks.

Law firm Minter Ellison says the case concerns section 54 of the Insurance Contracts Act. It shows “how vexed” its application can be and how it can be difficult for insurers to effectively limit the risk they agree to cover.

“Merely because a particular requirement is a condition of cover is not determinative,” partner Chern Tan said.

Section 54 states that an insurer cannot refuse to pay a claim on the basis of breach of contract if that breach did not cause any part of the loss claimed.

James Morse, Senior Associate at law firm DLA Piper, says section 54 relieves an insured from the effect of certain policy provisions in certain circumstances, “and has been the subject of debate and controversy, especially in recent years”

“It is a timely reminder of the need for insurers to give careful consideration to the impact that section 54 may have on all aspects of their policy wordings,” he told insuranceNEWS.com.au.