Insurers have been urged to take note of the ACT Supreme Court’s recent decision to issue a “special costs order” against IAG, after it rejected a $100,000 offer from a plaintiff to settle a car accident claim.

IAG had turned down the mandatory final offer from Nyssah Ryrie, citing among other things, her use of the words “pain and suffering” did not comply with the Road Transport (Third Party Insurance) Act (TPI Act), which replaced the terms with “non-economic loss” in 2013.

The insurer also submitted it was not unreasonable to reject the mandatory final offer as it was made before it received expert medical evidence that changed the complexion of the case, including the plaintiff’s need for a spinal fusion operation.

Ms Ryrie had suffered from serious lower back injury from the 2015 accident.

Moray and Agnew Lawyers says the court’s ruling should be viewed as a warning to insurers, particularly around the importance of understanding the cost implications of mandatory final offers. Insurers should also understand better the importance of obtaining and fully considering medical evidence prior to commencing proceedings.

In May ACT Chief Justice Helen Murrell awarded $370,501 in compensation to Ms Ryrie before deciding this month to issue the “special costs order” against IAG, the second defendant in the case.

Ms Ryrie made the claim for costs on a “party and party” basis after winning the compensation. She wants the costs to be paid until August 17 2018, the day she made the $100,000 mandatory final offer as required under the TPI Act.

Such awards are usually to cover for expenses incurred in running and preparing a case as well as non-recoverable outlays such as solicitor fees. The winning party is generally entitled to claim for “party and party” costs.

The amount of the cost order will be negotiated between Ms Ryrie’s lawyers and IAG.