The “claims made” provisions of insurance contracts have again come in for attention after the NSW Court of Appeal rejected an attempt by Gosford City Council to make a claim despite failing to notify its insurer of a potential claim during the policy period.

The decision has aroused much comment in legal circles, as this is the first appeal court to consider this problem, although the Supreme Courts of NSW and Queensland have made similar rulings.  The matter may go to the High Court.

The council had a claims made policy with GIO in 1991. There was no “deemed claims” clause, which would have allowed the council to obtain cover for claims made after the period of insurance. The council notified its broker of a potential claim during the currency of the policy, but the broker did not pass this on to the insurer, GIO.  No claim was made before the policy expired, but a claim was later made in 1994. GIO rejected the claim.

Commentators said last week that insureds will need to be careful in notifying potential claims to their insurers, and to ensure that the insurer is aware of all aspects related to the possible claim.