Insurance lawyers are showing great interest in Friday’s NSW Supreme Court judgement in the Hams v CGU Insurance case.

Mr and Mrs Hams suffered extensive damage to their rural property following heavy rainfall in February 2000. CGU refused to pay the claim, relying on a flood exclusion clause in the policy. 

On Friday the judge ruled that the damage to the Hams’ homestead was caused by stormwater and as a result it was covered under the policy. However, he also ruled that a mixture of flood and stormwater damaged a hangar on the Hams’ property and it was therefore not covered.

The judge upheld CGU’s position on the central issue of how claims involving a mixture of flood water and stormwater are decided, and found that CGU clearly informed Max Ham about the flood exclusion.

The case initially attracted attention last month when ASIC successfully applied to intervene in the case as amicus curiae  (friend of the court), with Consumer Protection Executive Director Peter Kell claiming it raised important consumer protection questions about insurance law. However, observers say ASIC took little part in the proceedings beyond registering its interest.  

CGU Communications Manager Chris Jackson doesn’t expect the case to have wider ramifications on the insurance industry, figuring it is “likely to make it more difficult for people who are disputing insurers’ handling of similar claims”.

The case has been carried over until Wednesday to allow the parties to make submissions in relation to the ruling. Mr Kell didn’t return calls yesterday, but ASIC is likely to make some use of the judge’s 103-page ruling. The regulator is known to still be keen on tougher requirements for disclosure of exclusions and perhaps better definitions of flood.