Primacy of Primary Insuring Clause

Schmidt J of the NSW Supreme Court has reminded us of the importance of examining the terms of the primary insuring provisions of policies in determining whether they respond.  This examination includes a requirement that the policy be interpreted to give it a business like interpretation.

In The Geo Group Australia Pty Ltd v AAI Limited t/as Vero Insurance [2016] NSWSC 803 (https://www.caselaw.nsw.gov.au/decision/576201a4e4b058596cb9c643#) the plaintiff, Mr Mace, brought claims in negligence against, among others, The Geo Group Australia Pty Ltd, for injuries he suffered in March 2010, while an inmate at Parklea Correctional Centre.  Geo operated the Parklea Centre under an agreement with the Commissioner of Corrective Services whereby it had contracted to provide, amongst other things, the services of psychologists, counsellors and custodial staff at the Centre.  The plaintiff alleged that Geo had failed to have him assessed and that that failure led to the plaintiff injuring himself.  Geo held a “Medical Malpractice Civil Liability Insurance Policy” with Vero which denied indemnity with respect to the plaintiff’s claim.

The primary insuring provision required the insurer to “….indemnify …….against civil liability for compensation …….resulting from the conduct of the Health Care Services”.  The insurer conceded that in order to trigger the policy there must be a causal connection between the claim and the conduct of the insured healthcare services but argued that the intention was to insure “for misadventures in the actualprovision of healthcare services”.  The judge pointed out that what was insured was for “misadventures in the conduct of the healthcare services”.  The allegations against the insured were in effect allegations that the insured had failed to undertake a proper assessment and to provide psychologist or counsellor services. That was held sufficient to trigger the primary insuring clause.

Post by Paul Hendriks