Keep a Watch on What the Policy Covers

Key point

• When deciding if a policy responds to a claim remember to ask the correct question.

In Kalloghlian v Chubb Insurance Company of Australia Ltd [2016] NSWSC 902, an insured made a claim under a contents policy for a lost Rolex watch. The insurer rejected the claim and the insured commenced proceedings in Local Court.  The magistrate found in favour of the insurer. The insured appealed to the NSW Supreme Court asserting an error of law.

The Supreme Court allowed the appeal and remitted the matter to the Local Court to be re-heard. The basis for that conclusion was that the magistrate had given inadequate reasons for his decision. However the Supreme Court took the opportunity to comment on the evidence, the policy and the magistrate’s analysis.

The Supreme Court noted that there were possibly curious aspects to the claim including: first, with respect to the acquisition of the watch, the insured was unable to locate any receipt or other documentation relating to its purchase and he could not remember the jeweller from whom it was bought; and secondly, with respect to the loss, that the watch had either fallen off his wrist or was taken from him by an unknown person, that he said he endeavoured to make a complaint to a policeman at the beach but the policeman was not interested and that there was no formal report made to a police station.                                

The Supreme Court commented however that the magistrate seemed fixated on whether the insured could prove that he had purchased the watch and seems to have equated proof of purchase with satisfaction of the primary insuring clause. This is despite the fact that the policy provided cover for the loss of property not only which the insured owns but also possesses. The Court considered that the magistrate did not seem to have asked himself the correct question as to whether the insured brought himself within the insuring clause. By focusing on the purchase of the watch he appears to have overlooked entirely that it was sufficient that the insured establish that he possessed the watch.

Post by Paul Hendriks