Thursday, 22nd of March, 2018

Accidents and Insurance


The Civil Liability Act (Tas) 2002

The Civil Liability Act 2002 (Tas) is the statute that applies in Tasmania for personal injury cases. There have been several amendments since then, which are incorporated into the Act. The common law is still important in Tasmania in determining issues such as the duty of care.

The Law

It is a common misconception that where a person has suffered personal injury or damage in an accident, they can sue the person responsible and that person can be made to pay them compensation. Only a small percentage of claims for personal injury are actually entitled to damages. Except in cases which are covered by specific legislation (such as workers compensation and motor vehicle accident) an injured person has to first establish that there has been negligence on the part of another person before they are entitled to damages. The Workers Rehabilitation and Compensation Act (Tas) 1988 and the Motor Accidents (Liabilities and Compensation) Act (Tas) 1973 provide for compensation (in some cases) where there is no negligence.

Until recently, the law determining liability for negligence was common law. However, the Civil Liability Act (Tas) 2002 has altered this situation, and now negligence in Tasmania is governed by both the common law and the Civil Liability Act. This Act sets out the legal standards, or tests, for determining whether or not negligence has occurred. Other Australian states, including Victoria, West and South Australia, Queensland, and New South Wales, enacted similar legislation. The legislation is mostly uniform, with some variation.

The legislative reforms have been the subject of a great deal of criticism. They were intended to bring down the cost of insurance premiums for negligence, but any changes in the insurance industry have been minimal at best. Moreover, there has been criticism that the limitations put in place to minimise civil litigation have precluded many people from the right to seek compensation for serious injuries incurred because of the actions of others.

Legal Advice

With any claim for civil damages it is important to seek legal advice. Law firms that specialise in civil claims are easily found on the Law Society Website

Negligence and the Duty of Care


Negligence in its legal sense means a failure in law to do what a reasonable person would have done in the circumstances. To establish liability a plaintiff must first establish that the defendant owed a duty of care towards the plaintiff. Over a period of years the law has established the requirement that people (including companies and governments) should conduct their affairs to the standard required of the reasonable person.

Before a plaintiff can recover compensation from a defendant in a negligence action, the plaintiff must show three things:

  • that the defendant owed the plaintiff a duty of care;
  • that the defendant breached that duty of care; and
  • personal injury or property damage suffered by the plaintiff as a result of that breach (causation).

When is there a duty of care?

When a court determines whether a duty of care is owed, it will take into account a range of legal principles and legal policy factors. Where a situation is a new one – where the relationship is not an established relationship including a duty of care, the courts take into account numerous factors. These can include:

  • the kind of harm suffered by the plaintiff (for example, physical, economic, mental);
  • the defendant’s control over the situation that gave rise to the harm, and the plaintiff’s vulnerability to that harm;
  • the nature of the relationship of the plaintiff and defendant, compared to other duty relationships;
  • ethical and moral considerations, including human rights considerations; and
  • consistency and coherency of legal principles and relationships;

There are some easily established relationships where a duty of care exists, such as occupiers liability, and motor vehicle liability. Outside of established relationships, the courts will consider the factors listed above in determining a duty of care.

Even where a risk is reasonably foreseeable, a court may not hold that a defendant has a duty of care. In determining this, the vulnerability of the plaintiff, whether the risk was ‘not insignficant’, and the nature of the harm suffered are essential considerations. There are also issues of inconsistency with other duties owed by the defendant in other relationships. For example, where a social worker investigates allegations of child abuse against a father, and the harm that follows is the loss of the father’s reputation and employment, the courts will consider the duties of the social worker to investigate the claims, and the duty relationship between social worker and child to override the reasonably foreseeability of the risk of harm to the plaintiff.

Other situations that are also not so easily decided include: does a driver owe a duty of care to a person out walking at night on the highway? Does a landowner owe a duty to a person trespassing on their land? Does an employer owe a duty of care to an employee who was injured despite the fact that employer took every precaution then known to the industry to protect the worker? They will be questions of fact for the court. Often, work place issues will be dealt with under different legislation.

Breach of Duty of Care

The current position in Tasmania for a plaintiff to establish a breach of a duty of care requires the plaintiff to satisfy three elements:

  • the person knew or ought to have known of the risk – sometimes called ‘reasonable foreseeability’;
  • the risk was not insignificant;
  • a reasonable person in that person’s position would have taken precautions against the risk.

That the risk was ‘not insignificant’ is one of the changes brought in by the Civil Liability Act. It has raised the bar required of a reasonable person before they are required to act. So, whilst a harm may be reasonably foreseeable, it must also not be an insignificant risk. The standards are unclear, and are decided on a case by case basis.

In addtion, the precautions that a court will consider reasonable will vary according to circumstance.The considerations that a reasonable person would have made in deciding to take precautions against a risk are specified in the statute:

  • the probability that the harm would occur if care were not taken;
  • the likely seriousness of the harm;
  • the burden of taking precautions to avoid the risk of harm; and
  • the potential net benefit of the activity that exposes others to the risk of harm.

In Tasmania, the courts can still consider the common law in reaching a decision.

The person knew or ought to have known the risk: reasonable foreseeability

So, for example in determining whether the person knew or ought to have known of the risk, the court can pay heed to Donoghue v Stevenson, a case from 1932 that concerned the remains of a snail in a bottle of ginger beer. Donoghue notes the importance of the foreseeability of the injury or damage resulting to the plaintiff from the defendant’s conduct, or lack of action.


Causation in the Civil Liability Act requires that the negligence be a necessary condition of the harm, and that the harm falls within the scope of the defendant’s liability. This means there must be a connection between the alleged negligence of the defendant and the harm caused to the plaintiff. It is a question of fact. A popular articulation of causation is: ‘but for the actions of the defendant, the plaintiff’s harm would not have occurred’. This is called the ‘but-for’ test. However, the Civil Liability Act has reworded this test to the cause being ‘a necessary element of the occurrence of the harm’.

The Civil Liability Act asks whether the foreseeability was ‘appropriate for the scope of the liability of the person in breach to extend to the harm so caused’. The Act looks to policy issues that may arise. The best way to phrase this is: ‘is there a reason the defendant shouldn’t be held liable?’ Consider the social worker example. This means that although a defendant may be in breach of a duty, the court may find that they are not responsible for the harm.

Another example would be the case of Verwayen, where the Commonwealth had been in breach of its duty of care when a ship sunk due to negligence. The Commonwealth was liable for the accident, however, the plaintiff sued for lung and liver cancer that resulted from heavy smoking and drinking that began on his part due to experiencing the accident. Previously, the courts discussed this in terms of ‘proximity’ and ‘remoteness’. Another factor is ‘nova causa interveniens’ – an intervening cause. The Civil Liability Act looks at this in terms of policy reasons: it would be inappropriate to hold one party responsible for all consequences of an event where there have been intervening factors, such as a person’s own choices.

The risk was not insignificant

A breach of a duty of care is often self evident. The Civil Liability Act has added an additoinal requirement that the standard to be met in finding a breach of duty from that of the risk not being ‘far fetched or fanciful’ to ‘not insignificant risk’. How much a ‘not insignficant risk’ exceeds the requirement of reasonable foreseeability is unclear, and to be determined on a case by case basis. 

A reasonable person would have taken precautions against it

This is easily referred to as ‘carelessness’. Carelessness is a failure to do what a reasonable person would have done in the circumstances. However, with the Civil Liability Act, the court now considers factors such as cost, and the magnitude of the risk in the taking of precautions. The question of what a reasonable person would have done in the circumstances is a question of fact in each case. For instance, a reasonable landowner might erect a fence along a cliff-face on their land if they knew that people were likely to be walking in the area. However, that landowner might not erect a fence if they thought that no-one walked there or sufficient barriers were already erected to keep people off the land and away from the cliff. If someone did fall over the cliff, the question of whether the landowner would have faced unreasaonble costs in fencing to prevent the injury would be a question of fact for the court.

Special Skills

When it is claimed that a person has negligently performed a task involving the exercise of special skills, the test for carelessness is whether the defendant carried out the work as carefully as a reasonably competent person possessing those skills would have. A surgeon is negligent if they fail to attain the standard of a reasonably competent surgeon. A house builder must attain the standard of a reasonably competent house builder otherwise they will be judged careless. This permits courts to consider the personal characteristics of the class of person to which the defendant belongs. 

Plaintiffs and Defendants

Who can bring a claim? The plaintiff

A person who suffers a harm can claim. This includes spouses of deceased partners in certain circumstances. Where that person has died, dependants and persons listed in the Fatal Accidents Act 1934 (see Motor Vehicle Accidents) may also be able to claim.  Section 27 of the Administration and Probate Act 1935 (Tas) provides that the cause of action survives for the benefit of the deceased’s estate; therefore economic loss could be recovered. Under workers legislaiton, the dependents of workers can claim compensation.


‘Professionals’ in tort law are generally lawyers, engineers, or registered medical practitioners. Section 22 sets out that a professional is deemed not to have breached a duty of care if their conduct at the time their professional service was provided was widely accepted by their peers in Australia at the time. The courts can reject the professional opinion If they consider the opinion is irrational. This is a defence only, and does not constitute the content of the duty of care.

Section 21 applies specifically to medical practitioners. It sets out that medical professionals do not breach their duty of care owed to a patient in failing to warn of a risk of medical treatment unless they fail to provide information about the risk. For example, an opthamological surgeon may provide pamphlets on Possible Blindness Resulting from Surgery to an older person about to undergo an operation for cataracts, and that person may subsequently go blind. However, because the surgeon provided the information, failure to warn of the risk does not constitute a breach of duty. Again, the standard of reasonableness applies – a reasonable person would want the information to make a reasonably informed decisions, and the registered medical practitioner ought reasonably know that patient would want that information before deciding on the treatment. So, being informed of a one in one billion risk that you will turn into a purple people eating monster is something that may fall outside the bounds of reasonableness. Although, the severity of such a consequence may mean that the risk will fall within the bounds.

If a registered medical practitioner must act promptly to avoid serious risk to the life or health of a patient and the patient is not able to hear of respond to a warning of risk, or there is not sufficient time to contact a person responsible for making a decision concerning a patient, the registered medical practitioner is excluded from the requirements set out in section 21.

Public Authorities

Changes in the law of negligence were directed, amongst other things, toward addressing issues of the liability of public authorities. To this end, the Civil Liability Act sets out the principles to be taken into account when determining whether a public authority has a duty of care and whether they have breached a duty of care. Resource allocation by the council, i.e. where they direct funding, can not be challenged in court. The standard by which public authorities are judged is that of the ‘reasonable public authority’. Reasonableness is an important legal standard.

With roads, public authorities will not be liable for their actions or inactions in relation to road conditions unless they were aware of the problem with those conditions before the incident in which the plaintiff suffered loss and/or damage. Other motoring issues are dealt with under Motor Vehicles.


Exemption of volunteers from liability depends upon satisfying three criteria: ‘volunteer’, ‘community work’ and ‘community organisation’. The volunteer must be doing community work for a community organisation. Some common categories for community work in Tasmania are: charitable, benevolent, educational or sporting. Organisations that are classified as community organisations are listed at Tasmania Online.

If a volunteer has satisfied these criteria and acted in good faith then they are immune from liability. However, this immunity does not operate if at the time the volunteer knew or ought to have known that they were acting outside the scope of the ‘community work’ of the organisation, were acting contrary to instruction or were significantly impaired by drugs (excluding prescription drugs) or alcohol, and this intoxication was voluntary. Community organisations incur the liability of their volunteers.

Food Donors – section 8B

Provided that a food donor donates food in good faith for a charitable purpose, and the food left the donor in a state that was fit for consumption, they are protection from liability for death or personal injury that results from consumption of that food.

Good Samaritans – section 8A

The term ‘Good Samaritan’ is derived from the Bible, in which a parable tells of a man who was robbed in the road, and no one would help him, until the arrival of the Good Samaritan. A Good Samaritan is a person who acts to assist or advise another person, unattached to any organisation or professional role, and thus acts as a volunteer. Under the Civil Liability Act, if the Good Samaritan acts in good faith and without recklessness in providing aid they are not liable in any civil proceeding for anything they did or did not do. This does not apply if they were significantly impaired by voluntarily consumed alcohol or drugs, including medication.

Intoxication - sections 4A-6

Intoxication at the time of the incident being litigated will result in a discount of 25% for contributory negligence, unless the court is satisfied that the person’s intoxication did not contribute to the cause of death, injury or damage. The court has a discretion to increase or decrease that percentage for contributory negligence.

If a person engages in conduct that constitutes a serious offence, and this conduct materially contributed to any of the litigated consequences, then they are not to be awarded any damages at all. This is a complete defence for the defendant against the plaintiff’s conduct where that conduct constituted a serious criminal offence.

What is a ‘serious offence’

A serious offence is defined as any offence that is punishable by more than 6 months imprisonment. Courts are very restrictive with this provision, and will ask when the serious offence activities occurred, in order to determine whether the harm resulted from the act itself, or from circumstances around that act.

On a very liberal reading, a serious offence would include cruelty to animals, under the Animal Welfare Act 1993 (Tas), it would also include trespass under the Police Offences Act 1935 (Tas), which alters the law regarding accidents on land, if the trespass itself materially contributed to the accident. The test is twofold: was the plaintiff engaged in conduct that constituted a serious offence? If yes, then the court asks whether that conduct materially contributed to the accident. If the answer to this is also yes, then the plaintiff will not receive any damages. An example is where a girl stole a car while intoxicated. The driver of the car was also intoxicated. At that point, she was no longer engaged in the conduct that materially contributed to accident, as she was no longer stealing the car, or driving it while intoxicated. The defendant must raise either the intoxication or illegal activity to access exemption from liability, it is not the place of the plaintiff.

Accidents on Land

Injuries or accidents on ‘private’ land includes homes, shops, schools, for example. ‘Public’ land in this context is land owned by government or statutory bodies to which the public has general access (for example, public roads and parks).

Who Pays?

When someone is injured by something dangerous on a premises or property, the occupier is responsible. The occupier is not necessarily the owner. It is the person who has possession of the place, such as a person holding a lease. This person has the right to decide who to admit and who to exclude from the land or premises. However a landlord (who is the owner but not the occupier) owes a contractual duty of care to the tenant and their family. In some cases, someone other than the owner or tenant has been held by the court to be the occupier. For example, an independent contractor on a building site may be an occupier, depending on the facts of the case.

Tenants are responsible for injuries caused by defects in their rented premises even if the landlord is responsible for maintaining the property. All tenants should therefore take out contents and householders' insurance which must include cover for liability for dangerous premises.

The Occupier's Responsibilities

The liability of occupiers is determined by reference to the familiar concept of ‘negligence’. The categories of invitee, etc are no longer binding on the courts, but they are not completely irrelevant because a court must still consider the manner of the plaintiff's entry upon the land.

The rights of a person injured on another person's premises can depend on the circumstances under which the person came onto the land. The plaintiff will fall into one of several categories and rights may vary accordingly.

Court actions for damages against an occupier are usually taken in the Supreme Court. In almost every case it is necessary to have legal representation.

Liability of Public and Other Authorities

People who lawfully use facilities such as playgrounds and other recreational reserves, public toilets, airports and railway stations have certain rights. This is governed under Part 9 of the Civil Liability Act (ss36-43).

The Courts now use four factors in assessing liability (s38):

  • the functions required of the authority in relation to financial and other resources available;
  • the reasonableness of allocation of resources is not open to challenge by a plaintiff;
  • the whole range of functions required of the authority is to be considered, not just the particular activity concerned; and
  • the authority may rely on evidence of compliance with general procedures and standards of the exercise of its function to demonstrate the proper exercise of its function in the matter to which the proceedings relate.

So, for example, if a plaintiff brings an action in negligence for harm suffered due to a branch falling on them whilst walking on a council maintained walking track, the court will consider the four points above. If there is evidence of general lack of compliance with procedures, of excellent resources available, and a failure to discharge procedural requirements, then it may be that a court will find for a plaintiff.

However, think of a poorly funded council, that allocates a bulk of its resources to a more pressing issue, such as road maintenance, and complies with general procedures in all areas of its responsibility, including park maintenance, then the result would be different. It is a matter of circumstance.

Section 42 of the Civil Liability Act sets out a further provision that deals specifically with road work. It states that there is no liability for a a harm arising from a failure of an authority to carry out road work or to consider carrying out road work, where there is no actual knowledge on the part of the authority of the risk. Other protective provisions include section 39, where there is no duty of care owed to a person engaged in a recreational activity if the authority has warned of the risk (i.e. a sign pointing out a risk).


If a plaintiff suffered no loss as a result of the defendant's conduct, no liability arises, no matter how careless the defendant has been. Thus a plaintiff who has been exposed to dangerous chemicals as a result of the negligence of another must show actual injury rather than the mere risk of injury.

The plaintiff must also show that there is a reasonably close connection between the defendant’s conduct and the injuries suffered by the plaintiff. The courts are unwilling to award damages for unforeseeable losses, particularly in relation to property damage. However, compensation is sometimes paid for unusual and unforeseeable types of personal injuries, when the ultimate injuries have resulted from some initially foreseeable injury to the plaintiff caused by the defendant. In one case, this principle allowed an injured worker to recover from his employer for massive brain damage and/or psychiatric illness resulting from a small scratch on his hand which had become infected.

Mitigating Damage

A plaintiff in a negligence action is under a duty to mitigate their damages. This means that if steps can reasonably be taken to reduce the extent of any loss, these must be taken. The defendant will not be liable for any loss which might have been mitigated. For example, a sales representative whose motor vehicle is damaged in a road accident due to another's negligence cannot claim a loss of sales for the period the vehicle was off the road if the loss could have been mitigated by the temporary hire of another vehicle. In this situation, the negligent party will, of course, be liable for the hire charges.

Assessing Damages

The Civil Liability Act 2002 (Tas) was intended to limit the amount of damages recoverable for personal injury. The common law was amended in three key areas: future loss of earning capacity; non-economic loss; and mental harm. Currently, Tasmanian courts can still award exemplary, punitive or aggravated damages. This means that where a breach of duty has been particularly egregious, or it is in the public interest to demonstrate condemnation, the court can impose extra penalties on a defendant.

Non-economic loss

Non-economic loss refers to things such as pain and suffering. There is no cap on general damages, or non-economic loss. This refers to physical injuries. The legislation was intended to prevent minor harms being litigated. The amounts to which the Act refers changes yearly with the consumer price index (CPI). Currently, if the general damages are assessed at or below Amount A: $4,000, no award of damages will be made. Between $4,001 and $20,000 the amount awarded is calculated with this formula:

Award = 1.25 x (amount assessed – Amount A ($4,000)

So, if Terry’s damages are assessed at $19,000 for two broken legs, the award will be 1.25 x (19,000 – 4,000) = $18,750.

Future loss of earning capacity

Economic loss awards of damages are limited by the average weekly earnings as published by the Australian Bureau of Statistics (ABS). The limit is set at three times the adult average weekly earnings. This means that a plaintiff who claims damages above three times the average adult weekly earnings must bear the losses above that amount on their own.

For example, if Terry claims he has lost $20,000 a week in earning capacity, but the average adult weekly earning is $1,333.40, Tasmanian courts can only award Terry the amount of $4,000.20. Anything above that cannot be awarded, and Terry must either have insurance or wear the loss himself.

Mental Harm

Loss resulting from mental harm requires that the mental harm be a recognised psychiatric illness. This need not be ongoing, such as schizophrenia. It can be a condition, such as Post-Traumatic Stress Disorder (PTSD), which in some cases is curable. This limits claims for mental harm, and ensures consistency of approach by the courts, as the courts must decide to the objective standard of a recognised psychiatric illness. 

Specific Time Limits

This part gives a survey of some of the more important current time limits. It is not a substitute for obtaining prompt legal advice. Some time limits change quite often as legislation is amended.

Time limits for common law actions such as recovery of debts, breaches of contract and torts, are set out in state ‘Limitation’ Acts. In Tasmania the relevant legislation is the Limitation Act 1974 (Tas). This Act imposes an absolute time limit of six years on most actions (s5(3)) if the personal injury was incurred before January 1st, 2005 - the general period is 3 years, and the 6 years is only on application. For personal injuries incurred after January 1st, 2005 the time limt is either 12 years from the date on which the personal injury was incurred or 3 years from the date of discoverability (s5A). This means the date on which a person was made aware of the injury - an example would be asbestos related lung cancer.  One important instance where the extension time and date of discoverability provisions are important is where a person suffers a ‘disability’ because they are unable to properly manage their affairs due to the fact that they are an infant or have a mental disorder. Another instance is where a debt is ‘acknowledged’ even though the time limit has expired.

Where a common law legal action involves seeking compensation for personal injuries, the action must in all cases be brought within three yearsor within 12 years of the date the injured person realised that he should sue the person who injured him (date of discoverability) but it is wise to sue within 3 years. This time limit applies, for instance, where someone is injured in a car accident and seeks compensation under the compulsory motor accident insurance scheme from the Motor Accidents Insurance Board (‘MAIB’), and also in the case of work-related injuries that are part of a ‘workers compensation’ claim; there are shorter limitation periods for Workers Compensation.

Much longer time periods apply in some cases under the Act. Actions to recover money or other property following a court decision can be brought for up to 12 years after the court decision. In the case of ‘adverse possession’ of land, the legal owner has 12 years in which to recover the land, though this period is 30 years in the case of the Crown. ‘Disability’ extends the 12 year period.

Numerous other time limits are found in other Acts. For example, the Commissioner of Taxation has seven years to sue a taxpayer for unpaid taxes where the taxpayer has made ‘full disclosure’ of their income, but the Commissioner may sue at any time for tax fraudulently withheld. A claim for ‘maintenance’ from a deceased's estate by a ‘dependent’ not provided for in the will must be made within six months after probate is granted (Testator’s Family Maintenance Act 1912 (Tas)).

There is a general time limit of 12 months to prosecute offences created by legislation other than the Criminal Code, though this may be extended to two, or even three, years in specific instances. There is no specific time limit on prosecuting crimes under the Code, but the longer the prosecution of the crime is delayed the less likely it is to succeed.

Defences to the Tort of Negligence

Contributory Negligence

The standard set out in section 23 of the Civil Liability Act and the Wrongs Act 1954 (Tas) to determine contributory negligence is simply whether a person who suffered harm has engaged in contributory negligence. This is determined on the basis of the standard of the reasonable person, and whether the person has acted as a reasonable person would have is decided on the basis of what the person knew or ought to have known at the time.

Intoxication attracts a presumption of contributory negligence (s5, Civil Liability Act). The courts can reduce a plaintiff’s damages award by 100%, and where intoxication is involved, the minimum reduction with intoxication is 25%, but can be greater.

The Court determines questions of contributory negligence on the basis of fact. To determine contributory negligence, the court uses a twofold test. First they determine whether negligence on the part of the plaintiff occurred, and secondly they attribute a value – usually a percentage, to the negligence. So, for example, a court may decide that a plaintiff contributed 30% to the overall negligence.

Obvious Risks and Voluntary Assumption of Risk – sections 16 and 17

The common law required that the defendant make out the defence of the plaintiff’s voluntary assumption of risk. With obvious risk cases under the Civil Liability Act, a plaintiff is presumed to be aware of an obvious risk unless s/he can prove on the balance of probabilities that s/he was unaware of the risk (s16(2)). However, a defendant must still establish the consent of the plaintiff to the obvious risk.

Moreover, section 17 has taken away the need to warn in respect of ‘obvious risks’ unless a plaintiff has requested advice or information about the risk from the defendant (s17(2)(a)). What is determined as an obvious risk is determined on the basis of the reasonable person. The obvious risk provisions establish knowledge on the part of the plaintiff, but not consent. Only a voluntary assumption of risk constitutes a complete defence to negligence, and so, a defendant must establish consent. Courts are also very restrictive in finding obvious risk.

Dangerous recreational activities

Sections 19 and 20 have altered the common law in respect of dangerous recreational activities. The Civil Liability Act states that people engaged in ‘dangerous recreation activities’, being a recreational activity that involves a significant degree of risk of physical harm to a person, undertake the activity at their own risk. A defendant will not be held liable for a breach of duty for harm suffered as a result of a dangerous recreational activity, if the potential harm is an obvious risk, and participants in the dangerous recreational activity are assumed to be aware of the risk. This is voluntary assumption of risk: knowledge and consent. Courts are very restrictive in classifying an activity as a dangerous recreational activity (DRA). Bungee jumping, however, is one such DRA. For example, if a person engages in bungee jumping, and the person winds up a paraplegic, they are assumed to have been aware of the obvious risk, even if they were not, and so can not make out a rebuttal of the presumption of that knowledge.

Motor Vehicles

What to Do After an Accident

Practical Steps


When a driver is involved in an accident, the following steps should be taken if practicable:

  • take the names and addresses of any witnesses;
  • if possible, make handwritten notes of any conversation with the other person involved in the accident. Make a sketch plan including distances, width of street, lane markings and any other significant features of the accident scene. If the person has a camera, take photographs of the scene;
  • obtain full particulars of the driver and owner of the other vehicle, the registration number of the other vehicle and find out if the vehicle is insured and if so with which insurance company;
  • do not make any admissions about liability for the accident or this may invalidate insurance;
  • even if undecided about whether to make a claim on an insurance company, report the accident to the insurer as soon as possible. Otherwise, the insurance company may try to deny compensation if a claim is made later.

Legal Obligations


After an accident, the drivers involved must stop immediately and assist any person who may be injured. If required to do so, the driver has to show or give to the other driver, or to any police who are present, or to any injured person or any other person involved in the accident the following information:

  • their licence;
  • their name and address and that of the owner of the car; and
  • the registration number of the car.

Police can also require the driver to give details of the time, place and nature of the accident, the names of the persons involved and of witnesses and details of injury and damage.

Further, if involved in an accident, the driver must report to the police any accident in which a person is injured or killed. They must also inform the Motor Accident Insurance Board (MAIB) in writing of an accident in which any person is injured or killed. Leaving the scene of an accident without exchanging details is a criminal offence.

Whether to Sue

After a vehicle has been damaged, a person generally has three options:


  • claiming on their own policy;
  • paying their own costs of repair; or
  • demanding payment from the other party, and suing them if necessary.

In deciding what to do, a number of factors must be considered, including whether or not the person is insured, and if so, what type of policy they have.

Who Was At Fault?

Deciding whether or not another driver was at fault (that is, negligent) is often quite difficult. Clearly, a driver who is drunk is driving negligently if they collide with another car because of their drunkenness. A vehicle being driven at a speed above the speed limit is probably being driven negligently. Failing to stop at a red light, or stop sign, is also obviously, negligence. However, negligence means the failure to act reasonably. A person who is in doubt whether or not the other driver is at fault, should get legal advice.

In many cases, it is impossible to say that only one party was at fault. In such a case, a court can apportion (share) the damages between the parties according to the degree of each one's responsibility under the Wrongs Act 1954 (Tas) (s4). Where one party shares responsibility for an accident that party is said to have been contributorily negligent.

Financial Position of the Other Party

If the other vehicle was not insured, it is important to find out whether the party responsible can afford to pay for repairs. There is nothing to be gained by incurring legal costs in court against a defendant who is simply unable to pay. In such a case the person’s best course of action is to claim on their insurance policy, or pay for their own repairs if they are not insured.

Legal Costs

If the person decides to sue for damages, they must consider legal costs. It is possible to handle all or part of such a claim themselves to minimise costs, but in many cases this may not be advisable especially where the claim is defended. If a person does instruct a lawyer to handle their claim, legal costs are recoverable from the defendant if they are successful, but a solicitor may be entitled to charge more than the losing party is ordered to pay (as ‘solicitor to client’ costs). If the person chooses to sue in the Small Claims Court, where the claim does not exceed $5,000, no lawyers are involved, and therefore costs are minimal. Losing and winning parties cannot normally claim costs.

Contributory Negligence

Contributory negligence occurs in accidents at intersections where, for example, the driver of the vehicle with right of way may be held 25% responsible. This is because every driver is supposed to drive safely in all circumstances. Failure to take reasonable steps to avoid an accident (perhaps because of excessive speed) may lead a court to find that the driver is partly responsible for the accident. In some cases a person may recover 100% of their damages (for example, if the car was parked at the side of the road and was hit by another car). But the possibility of apportionment must always be considered.

Example 1

A's car and B's car collide at an intersection. Each suffers $1500 damages. A sues B for $1500 and B counter-claims (sues A) for the same amount. B is found 80% responsible and A 20%.

A gets 80% of $1500 from B = $1200
B gets 20% of $1500 from A = $300

A will get damages of $1200 less $300 = $900. In addition, the court may order B to pay legal costs of $350 but A may have to pay a solicitor $500. In this situation A will end up getting $750, half the cost of repairs to the car.

Thus the driver of the first car may have to pay a share of the other party's damages even if the driver of the second car is mostly to blame for the accident. It can be that these damages (that is, cost of repairs) are much greater for the second car, which can cancel out any benefit to the driver of the first car.

Example 2

A's repairs cost $1000, B's repairs cost $4000. The court decides A is 20% responsible and B is 80% responsible.

A gets 80% of $1000 from B = $800
B gets 20% of $4000 from A = $800

Thus A's damages and B's damages cancel each other out. A has to pay lawyer's costs and the $1000 for repairs. In such a situation it is obviously not worth suing.


Before deciding whether to sue, it is necessary to compare the costs of repairs with the excess and loss of the no-claim discount on the insurance policy. Legal costs must also be considered. If the cost of repairs to the car is small (say, under $1000), it is often not worth claiming on insurance, or getting a lawyer. A person can, however, handle a claim against the other party themselves and they may still get some compensation.

Poor Repair Work

Sometimes repair work leaves much to be desired. It is a good idea to take the vehicle to the RACT for an inspection and test if possible. If not, the owner should check it carefully themselves, especially paintwork and chassis alignment. If the work is not up to standard, they should inform the repairer and ask them to fix it. If the repairer refuses, the person should report the matter to the Office of Consumer Affairs or get legal advice.

Expenses Other Than Repairs

The owner of the vehicle can claim the cost of hiring another vehicle if it was reasonable to hire a replacement vehicle, for example, if the vehicle was essential to earn income. The obligation rests upon the person making the claim to show that the hiring charges were reasonable, and were for a vehicle comparable to the one damaged. In some cases, wages or profits lost may be claimable (for example, a taxi driver's net income during the period the taxi was being repaired when no replacement vehicle could be obtained can be claimed). A person should get legal advice if they wish to take action for loss of this nature.

Self-Help Handling a Claim

Preliminary Steps

The person should have found out the other party's name and address at the scene of the accident. If not, it may not be easy to discover it as there are privacy considerations. The Registrar of Motor Vehicles has a discretion to release this information. It is suggested that a party to an accident write to the Registrar requesting the identifying details and explain why the information is needed. The Registrar also maintains a website, which provides a description of a registered vehicle, but does not give details of ownership. If an accident has been reported to Tasmania Police and an investigation takes place, the Police will provide information.  One should write to Accident Records at GPO Box 308 Hobart.  There is a fee. 

Having found out who to sue, the person should also have the cost of repair to their vehicle assessed by reputable repairer with a written quotation. It is not necessary to have two quotations, but it is advisable. If there are two quotations, the lower price should be claimed for.

Where to Sue

A person who is uninsured, or insured but not going to claim under their policy, may decide to handle their own claim. If damages are $5,000 or less a person can commence their action in the Small Claims Court. If damages are over $5,000 they must commence their action in the Magistrates Court (Civil Division). If damages are over $50,000 they must commence their action in the Supreme Court. Parties can agree to keep cases in the Magistrates Court when the amount is over $50,000, but both parties must agree. 

Other Party Uninsured

Send a letter of demand, plus the quotation to the other party. If a reply is received from the other party, and they accept responsibility, arrangements should be made how the money is to be paid (either in a lump sum or by instalments). This arrangement should be confirmed in writing.

If the repair quotation is disputed, contact the other party and offer to supply another quotation. If there is already a second quotation, it can come in handy here to cut down the delay in having the vehicle repaired. If the other driver denies liability, proceed to issue a summons against them.

Letters of Demand

A Community Legal Service should be able to help with the wording for letters of demand. If the other party is insured, send a letter of demand to that person and also a letter of demand and the quotation to the insurer involved. A letter should then be received from the insurer accepting or denying liability, and giving details of what to do next.

If the insurance company writes back saying that they will not accept liability (for example, because their insured was drunk or unlicensed at the time of the accident), it will be necessary to act as if the other party were uninsured.

Insurance Excess

If an insured person has made a claim on their insurance, and has had to pay an excess, they may be able to recover this sum from the other party. Alternatively, their insurer may do this for them (check with the insurer first).

If they wish to recover this sum themselves, they should send a letter of demand to the other party. If they receive no reply, they should decide whether to commence proceedings in court, bearing in mind the costs involved. If their excess is small, they may be advised to swallow their pride and go no further. If it is substantial, they can consider starting court proceedings.

Admitting Liability

If a person receives a letter of demand, they should not ignore it. If they are responsible for the accident, and the amount claimed is reasonable, they should pay as soon as possible. This will avoid further expense, such as court costs, and lawyer's fees. If they are not sure about who is responsible they should get legal advice.

If they decide to fight the claim, they can write to the other party denying liability and, if their vehicle has been damaged, state that if legal action is started, they will claim for the repairs to their own vehicle. They may also dispute the amount of damages claimed by the other party. They are entitled to request copies of repair quotations and invoices and receipts for the damages claimed by the other driver.

If there is no dispute about responsibility for the accident, and the person is uninsured or does not wish to claim on their insurance policy, they may offer to pay the amount claimed by instalments. The amount of such instalments should be determined by their financial position.

Where insurance companies have paid out a claim they are entitled to take legal action in the name of their insured to try to recover the amount. Drivers of uninsured vehicles frequently face such a claim, and may try to pay the repair costs by instalments if they can't afford a lump sum. The person seeking compensation (insurer or private individual) will often accept a lump sum payment for an amount less than the total amount of the repair costs in preference to instalments. This is called ‘settlement of the claim’. If the person is insured, and they receive a letter of demand, they should notify their insurance company as soon as possible, giving full details of the accident if they have not already done so.

Court Action

Consider again whether the claim is worth taking to court. Remember that a summons against the other party may provoke a counter-claim.

Transfer to Another Court

The defendant may transfer the claim to some other court. This can occur in three situations:

  • transfer to another Magistrates Court (Civil Division) or Small Claims Court in the district where the defendant lives or works;
  • transfer to the Small Claims Courts in matters below $5,000;
  • transfer to the Supreme Court where there is a counterclaim over $50,000.

After Judgment

Once judgment is obtained, the defendant should pay up. If not, the person will have to get advice from the staff at the Magistrates Court (Civil Division) on how to enforce the judgment against the defendant, or follow procedures for debt enforcement.


When claims are settled, it is normal and indeed advisable for the person or insurance company paying the money to obtain a signed release from the party who has made the claim. This document releases the party from further responsibility. The release should be in terms such as the above. If a person is asked to sign a release by the other party, they should ensure that it does not prevent them taking action for personal injury. If in doubt, get legal advice. If they are the defendant, they should not pay any money without getting a signed release from the other party.

Claims Contested in Court

Need for a Lawyer


Court proceedings are quite often complicated and can be stressful. If a person has to go to court to prove their claim, they should consider instructing a lawyer to handle the case. This is especially so if the other party has a lawyer. If they have organised their own letters of demand, their lawyer would not be involved in the first part of the process, and the fees would be reduced.

More than one court appearance is usually involved. There are appearances to arrange procedural matters.

All claims must go to some form of conciliation before there can be a hearing.  Conciliation is a meeting between a mediator and the parties and their lawyers (if they have lawyers).  It is designed to settle the claim by agreement without the expense of a trial by a judicial officer.  More than 80% of claims settle at mediation. 



In any court action for damages as the result of a motor vehicle collision, evidence is given orally by those persons who are directly involved, or who witnessed the accident. The drivers of each vehicle, and their passengers, can give evidence of what they saw and what they heard. Courts tend to give more weight to the evidence of independent witnesses, such as drivers of other vehicles or pedestrians who saw the accident. The onus of proving that the other party was negligent rests upon the person making the claim.

Quite often a very useful witness is the police officer (if any) who was at the scene. A person can find out who the officer was, and also who the police believe was most responsible for the accident, by applying for a traffic accident report (TAR). To get a TAR it is necessary to fill in a form called an ‘Application for Traffic Accident Information’ which can be obtained from a local police station. A fee must be paid.

Frequently, a police prosecution is commenced against one of the drivers concerned. Police (‘criminal’) proceedings are quite separate from civil proceedings for damages, and the fact of a conviction cannot be used as evidence in the civil case. In civil cases the court looks at all the circumstances of the accident before deciding which party or parties are at fault and, as indicated earlier, can decide that both parties are at fault in varying degrees.

However, if the person is aware that a police prosecution is taking place it may be a good idea to attend the court, or have someone attend on their behalf, to see what is said, especially if a large claim is involved. If there is a hearing, then the evidence of the police, the defendant and witnesses can be noted. In case of a plea of guilty, the statement of the police prosecutor can be checked against the TAR and the ‘plea in mitigation’ made by the lawyer or defendant can be noted. Written notes should be made of important evidence, especially an admission of certain key facts. This will help the person (or their lawyer) prepare their case more thoroughly. In certain circumstances this evidence can also be used where the defendant later gives a different account.



It is a general rule of law that any party who has suffered damage must minimise that loss. This is called the duty to ‘mitigate damages’. If a person is claiming damages following an accident, they must prove that the damages were caused by the collision. It is necessary therefore to obtain a detailed quotation for the repairs to their vehicle, and in fact it is advisable to obtain at least two quotations as evidence of the reasonableness of the claim.

Sometimes, of course, the vehicle will be so badly damaged that the repair costs will exceed the market value of the vehicle and it will be uneconomical to repair. It is only possible to claim the value of a vehicle at the time of the accident, and to prove this a certificate of valuation is needed from the repairer. If the claim is a large one, it is wise to engage a loss assessor (or adjustor) who will charge a fee. This can be recovered as part of the legal costs.

Types of Insurance

Compulsory Third Party

When a motor vehicle is registered, part of the payment is received by the Motor Accidents Insurance Board (MAIB). This payment allows a person to be paid benefits if they are injured in an accident. These benefits include hospital, medical and ambulance expenses and may also include allowances called a weekly disability allowance for employed persons, a self-employed person's allowance, a housekeeping allowance and a dependant's allowance. If a person, or their passenger, is injured as a result of the negligent driving of another person, they may be entitled to common law damages in addition to the benefits paid by the MAIB. A person is entitled to benefits and damages from the MAIB even if the driver at fault has not paid their premium, or if the injured person cannot identify the other vehicle involved in the accident.

To make an application takes three steps: report the accident to the police, report the accident to MAIB, and then make a claim within 12 months of the date of the accident.

Third Party Insurance

This type of policy only covers claims by other persons for damage to their property. It is normally taken out by owners driving a vehicle which they consider not valuable enough to insure comprehensively, or for people who feel they are unable to afford comprehensive insurance. Every owner of a motor vehicle should have at least this type of insurance. The insurance can be arranged at a relatively small premium cost. Third party insurance may also be the only type of insurance available for an imported vehicle through a non-specialised insurer.

Comprehensive Insurance

This type of policy covers claims for property damage. It covers for claims by other persons for damage to their property, and also for damage to the person’s own property arising out of an accident. 

Comprehensive Car Insurance

If a vehicle is covered by a comprehensive insurance policy, it is generally best to let the insurer handle the claim. The person can decide not to claim on their insurance, and instead handle their own claim (see below). Either way, they should be aware of the following factors.

Advantages of Claiming

A major benefit gained by immediately making a claim on an insurance policy, is that the vehicle involved will be repaired with a minimum of delay. Furthermore, some insurers still permit an insured to keep their no-claim discount (even if they have made a claim) if the accident was not their fault and the insurance company, after processing their claim, was able to recover the damages from the party responsible. In these circumstances, the insurance company will normally try to get back all or part of the insured’s excess from the other driver. If the person does make a claim on their insurance policy, their insurance company can commence an action against the other driver in their name. This is known as ‘subrogation’. In such a case, the insurance company will pay all the costs of the action. If the insurance company recovers more in damages than it paid to the insured person, it will generally give them the balance (after deducting its legal costs).

Excess on a Policy

The ‘excess’ is an amount stated in an insurance policy as payable by the person themselves when they claim on the policy. The excess varies with insurance companies, the age of the driver, and the insured's driving history. The standard excess is around $500. So, if a claim is for $600, your will pay $500 and your insurer will pay $100. All insurers insist on a special excess for drivers under 25 and for them it may be an additional $500. If a person has had a previous claim, the excess may be increased. The insured should find out their excess before making a claim. It is possible to pay an extra premium to remove all or part of the excess. 

​No-claim Discount

In calculating the amount of premium a person will pay each year on their comprehensive policy, insurers have adopted a principle of rewarding owners who have not made claims on their policy. If an insured makes no claim during each year of the insurance, the insurance company will normally, at the time of the renewal, adjust the rate of premium so that they are paying less than the previous year (though general increases in rates may off-set this). Conversely, if they have made a claim during the previous year, they will have to pay more. It is therefore advisable, before making a claim on an insurance company, to find out from them the effect it will have on the no-claim discount. The no-claim discount is generally worked out as a percentage of the standard (or basic) premium. You should consult your insurance company about their no-claim discounts.

Third Party Property

Where a person has third party property insurance, the main thing to remember is that their policy covers them for damage to the other party's property, so there is nothing to stop them suing for their own damages and, if the other party counter-claims, having that claim defended by their insurance company. They must of course, notify their insurance company of the accident and of any claim made against them. However if a person sues for their own damages, they must consider very carefully the amount of their damages compared with legal costs and other factors.

Personal Injury


In any court action for damages for personal injury, a plaintiff (that is, the injured person), must prove that the defendant has been negligent. Drivers of motor vehicles owe a duty to take care to all fellow road users, their passengers and pedestrians. The fact that a driver has committed a breach of the Traffic Act or Regulations, does not necessarily mean they have been negligent. It is only one of the factors which must be considered. All the surrounding factors at the time of the accident must be considered. It is important to realise that an injured party must be able to establish negligence. Simply being injured in an accident, does not automatically result in an injured party being compensated.


Some of the more common breaches of the duty to take care are:

  • driving at a speed excessive in the circumstances;
  • failing to keep a proper lookout for other traffic and road users;
  • entering an intersection without regard for other traffic which may also be entering that intersection; and
  • driving the vehicle with insufficient control, for example, because of intoxication by alcohol or drugs or using a mobile phone.

The Motor Accidents (Liabilities and Compensations) Act 1973 (Tas) sets up a scheme of compulsory insurance to compensate persons injured or killed in motor vehicle accidents. The aim of the Act is to ensure that every vehicle being used on the roadway is insured. Registration (or renewal of registration) of a vehicle in Tasmania automatically includes compulsory third party insurance coverage. The Act provides penalties if an uninsured vehicle is driven on a public road, and an injured plaintiff can sue the owner of a vehicle in such a case even if they are not the driver, though it will usually be the driver who is sued.

A vehicle registered in another state is not uninsured for this purpose if it is being used for a visit to Tasmania. The equivalent Act in the owner's home state provides cover, and there are reciprocal arrangements between the states about this.

The accident must be reported to a police officer because failure to do so may relieve the Motor Accidents Insurance Board (MAIB) from liability unless the MAIB decides that such failure should be excused.

The Act enables a person injured by, say, a hit-run vehicle, to take action and be compensated for their injury even if the vehicle has not been identified, and the driver has not been located. An action can be taken directly against the MAIB. A person injured in a collision when struck by an unidentified vehicle, should immediately seek legal advice. A person injured by an unidentified vehicle must, to be successful in a claim for damages for personal injury, satisfy the court that reasonable steps have been taken to identify the vehicle.

A Notice of Intention to make a claim, together with a short statement of the grounds, must be given to the MAIB within three months of the date of the accident.

Any person who is injured in a motor vehicle accident in Tasmania can seek compensation by applying to the MAIB. If the other driver is at fault, the person and their passengers can also sue the other driver for extra compensation. This is known as ‘common law damages’. A lawyer will know if there is enough evidence for this type of case. In most cases, benefits will still be paid, even if the accident was the injured person’s fault. However, they will not receive benefits if:

  • The MAIB Premium had not been paid;
  • they were driving the motor vehicle under the influence of alcohol or drugs, and are convicted in court for this offence;
  • they are convicted of manslaughter, dangerous driving etc;
  • they were driving without a current licence (except in certain limited cases);
  • they were driving while their licence was suspended;
  • they are entitled to Compensation by any Commonwealth or interstate law;
  • they were taking part in a motor vehicle race;
  • they were using the motor vehicle to commit an offence of dishonesty or violence or terrorism;
  • their death or injury was intentional; or
  • The injury was caused by ionizing radiation.

After an accident, a person may be asked by the police to make a statement. The person should remember that anything they say or sign may be used in evidence against them. They are obliged by law to tell the police their name, address and age and the registered number of the vehicle. If they are not the owner of the vehicle, then they are obliged also to give the name and address of its registered owner. They are not obliged to provide any further information.

The plaintiff must still establish that the injury was a result of the other driver's negligence. Sometimes an injured party will find that, as well as having an action at common law for damages; they are also covered by Workers Compensation Insurance. 

When a person is injured in a motor vehicle accident in circumstances where workers compensation would be paid, the workers compensation insurer will pay workers compensation. The injured party cannot recover ‘no fault’ benefits from the MAIB, but can claim similar benefits under workers compensation and pursue a claim for common law damages against the negligent party.

Any payments made by the workers compensation insurance company will be refunded by the MAIB to the insurer, if a third party is found negligent at the end of the plaintiff's claim for damages. This is because these expenses will form part of an overall award of damages.


What can be claimed?

In assessing the amount of damages to which an injured person is entitled, a number of categories of damage are recognised. All hospital, medical, ambulance and other associated expenses directly resulting from the accident, plus the loss of wages to the date of the hearing can be claimed as ‘special damages’.

When involved in an accident it is advisable to keep a record of all payments made resulting from the accident, and also to keep receipts. If not yet paid, the accounts themselves should be retained, either to give to the insurance company, or to produce in court as proof of the claim. 

An injured party is entitled to lump sum compensation for the injuries, disabilities and loss of amenity of life suffered as a result of the accident and future economic loss including future loss of wages, medical, nursing and other treatment. These are called ‘general damages’ and are obviously the most difficult part to assess. Judicial Officers must take account of the type of injuries sustained, the period of hospitalisation and the pain and suffering the person has had to bear. Most importantly, consideration must be given to any continuing disabilities, their expected duration and their effect on the person's earning capacity, together with future nursing and treatment costs.

As a general rule, if an injured person has some residual disability as a result of the accident, it is advisable to commence proceedings in a court, rather than to attempt to settle the matter quickly. Often the injuries take some time to settle down, and the final disabilities will not immediately be apparent. The injured party must rely on medical advice about the disabilities, and the advisability of settlement at any time during the action.

Once a claim has been settled, the insurance company will obtain a signed ‘deed of release’ from the claimant which will preclude any action in the future. The claimant should be guided by medical and legal advisers before settling a claim or signing a deed of release.

In settling a claim, the lawyer handling it will be able to advise the amount the injured party would receive in compensation. The lawyer's costs and disbursements will have to be deducted, and there may be repayments for medical or hospital expenses, worker's compensation payments or income support payments from Centrelink which have been paid to the injured party whilst unable to work. In addition, a recipient of a compensation lump sum may not be able to claim income support payments from Centrelink during a preclusion period. All these factors must be investigated and considered before a claim is settled.

10% of the lump sum settlement must be paid to the Health Insurance Commission (Medicare).  Any payments by Medicare for treating the injury are repaid and the balance paid to the claimant within 3 months.

Making a Claim

Any claim for damages for personal injury must be within three years of the accident. Where a claim is made on behalf of a child, the action is usually commenced in the name of one of the parents as the ‘litigation guardian’ of the child. If an action has been commenced on behalf of the child and the claim is settled, that settlement is not operative until approved by a judicial officer of the court in which the proceedings have been commenced.

When claiming compensation for personal injuries arising out of an accident, it is best to seek legal advice. The bulk of legal costs can usually be recovered (as ‘party-party’ costs) and the remaining (‘solicitor-client’) costs taken out of the damages settlement. Depending on the nature of the claim and the seriousness of the injuries, the claim can be dealt with in one of two ways:

  • the claim can be settled directly with the MAIB; or
  • acommon law action for damages can be taken, and either settled during the proceedings or, if not settled, decided by a judicial officer.  (The MAIB pays the claim and legal costs on behalf of the defendant.)

If the injuries are minor and there is no continuing disability, it is usually advisable to attempt to settle the claim without going to court. This is done by the person’s lawyer giving the MAIB information enabling them to assess the value of the claim and to pay an agreed figure. Usually, this procedure will bring a much quicker settlement. If the claim is made in a court, there will be some delay (of at least one to two years) having it heard and determined. The Supreme Court has power to hear and determine claims for an unlimited amount. All actions for personal injury or death arising from motor vehicle accidents are tried before a judicial officer without a jury.

Possible Defences

Sometimes it will be alleged by the defendant that the party has been injured because of their own lack of care. Courts can apportion liability for motor vehicle accidents on a percentage basis, depending on the negligence of the parties concerned. An injured party will succeed in their action by proving initially that the other driver has been negligent. But the damages which they would normally recover will be decreased if the court decides that they did not take reasonable care for their own safety. For example, a driver may sue the other driver in a collision for personal injuries, but may be held partly responsible for the injuries themselves because of failure to wear a seat-belt.

Usually an injured person will be precluded from recovering any damages at all on the basis that the risk of injury was voluntarily assumed (for example, when a passenger knowingly gets into a car with a driver who is grossly affected by alcohol). Good legal advice should be sought in such a situation since a claim may not always be useless.

Claiming Compensation

Fatal Accidents Act - Rights to Claim

Under the Fatal Accidents 1934 (Tas), the following relatives of a person who died as a result of injuries received in a motor vehicle accident may, in Tasmania, be entitled to recover damages against the person responsible:

  • wife
  • husband
  • de facto partner
  • parent
  • child
  • sibling
  • half-sibling
  • stepparent
  • stepchild
  • grandparent and
  • grandchild (ss3-5).

Legal action must be commenced within three years of the death. Any sum awarded will be for the benefit of all the deceased's dependants and will be apportioned as the court directs. However, the legal proceedings may only be commenced in cases where the wrongful act, neglect or default which caused the death would (if death had not occurred) have entitled the deceased to sue for damages for negligence.

Uninsured Persons

If a person is uninsured they have only two choices:

  • demand payment from the other party and sue them if necessary; or
  • pay their own repairs.

Types of Damage: Property and Person

In a motor vehicle accident, two kinds of damage may be suffered. These are:

  • property damage, for example, damage to cars, motor cycles, clothing, luggage, walls and fences; or
  • personal injury, for example, cuts, bruises, broken bones.

In recovering compensation for these damages, different insurance policies apply and it is advisable to handle each claim separately. While the extent of personal injuries will be unclear for some time, the extent of damage  of a vehicle is usually apparent immediately and the owner will want the vehicle back as soon as possible.

In the case of personal injuries there is a time limit of three years from the date of the accident in which to commence a court action. In the case of property the time limit is six years (Limitation Act 1974 (Tas)ss4-5A). It is possible to sue for property damage only and later to sue for personal injuries (or vice versa).

In both cases, it is necessary to prove that the other person was negligent, and that the damage was caused wholly, or in part, by lack of reasonable care by that other person in the driving, control or maintenance of their vehicle.

The fact that the other driver has been found guilty of a criminal offence (for instance, negligent driving) arising out of the accident, does not mean that the court will come to the same conclusion in a civil case. Indeed, such a criminal conviction may not even be admissible in evidence in a civil claim for compensation. However, the standard of proof in civil cases is a lower standard. 

Claims for damage to property up to an amount of $5,000 can be heard and decided by a Magistrate in the Small Claims Court. A court action for damage to property exceeding $5,000 and up to $50,000 should be commenced in the Magistrates Court (Civil Division). In proceedings in the Magistrates Court (Civil Division) it may be advisable to have a lawyer. In the Supreme Court this will be essential for most actions.

Losing Insurance Cover

Once an insurance policy has been taken out it is advisable to read it carefully. Most comprehensive and third party property policies contain special conditions, and failure to comply with them can result in the insurance company refusing to accept a claim. Here are some common problems.

Failing to Report the Accident

Most policies require the insured to report any accident or damage to the insurer as soon as possible. Even if the person does not intend to claim on their insurer, it is still advisable to notify them, indicating that the notice is not a claim.


Most policies stipulate that no cover will be provided if the vehicle was being driven by a person under the influence of alcohol or a drug. However, the fact of a conviction of an offence against the Road Safety (Alcohol and Drugs) Act 1970 (Tas) will not necessarily invalidate insurance cover.

Unlicensed Driver

Most policies provide that the insurer can refuse to cover a claim if the vehicle was being driven by an unlicensed driver, unless that vehicle is stolen. This includes a person to whom the owner has lent the car. If a person is going to lend their car to someone, they should always check that the other person has a valid driving licence. This will protect them, the driver and anyone suffering damage in an accident.

Past History of Insured

When filling out the proposal for insurance, it is important that all questions in the proposal form are answered truthfully. Questions are normally asked concerning the owner's past driving record and must be answered fully and honestly. If not, the insurance company may refuse to honour a claim. It is important that during the currency of a contract of insurance, that the insurance company is advised of any material changes in the information provided at the time of obtaining the original policy of insurance; for example, a modification of the vehicle or suspension of a driving licence.


The Contract of Insurance

Insurance law involves Commonwealth legislation and the common law. The Insurance Contracts Act (Cth) 1984 is the major statute discussed in this chapter. Other relevant legislation includes the Financial Services Reform Act 2001 (Cth) and the Life Insurance Act 1995 (Cth).

Insurance law is so complicated, that any short statement about the law must be inaccurate in some respects. This chapter is therefore only a general statement. If you have a dispute with an insurance company you should seek legal advice or approach the Financial Services Ombudsman.

Insurance policies are contracts of the utmost good faith. This means that the proposer (the person wishing to insure their life or property) must disclose to the insurer (the person accepting the risk) every fact that may reasonably affect the decision to accept the risk.

Insurance rests on the concept of an insurable interest. A person wishing to take out insurance on a life or on property must have some legally recognised interest in that life or property.

What the Insurance Company Must be Told

In a word, everything. A more precise answer would be long and complicated because the common law has one test, and the Insurance Contracts Act 1984 (Cth) uses a different test. Also, what a person must tell the company varies, depending upon the type of insurance, and their personal circumstances.

The only safe course is to answer every question in the proposal form, as accurately and in as much detail as possible. If in any doubt, a person should tell the insurance company everything. Not doing so may mean that their policy is worthless, and their premiums entirely wasted, although when the Insurance Contracts Act applies, the position will be less harsh.
Fundamentally there are two categories of facts which a person must tell the insurance company about.

Facts About the Physical Hazard

This includes facts that will put the insurance company at greater risk than usual such as:

  • in the case of fire insurance, anything which makes a fire more likely, harder to extinguish, or fiercer;
  • in relation to motor vehicle insurance, anything which makes the vehicle more likely to be involved in an accident, or more expensive to repair; and
  • in life insurance, any illness or disability which adversely affects of person’s life expectancy.

Facts About the Moral Hazard

This includes facts which, in the eyes of the insurance company makes the insured (or people closely associated with them and with the risk insured against) a person who might possibly make a dishonest claim. For example, if a person insures the contents of their house against theft, the fact that they, or their spouse or anyone else living in the house has a criminal record, might make the insurance company reluctant to insure them, except at a higher premium. Similarly, the fact that they have had half a dozen prior theft claims on insurance companies, or that another insurance company has previously refused to insure them, might have the same effect upon the insurance company.

It is of course unpleasant to have to tell an insurance company about these kinds of facts, but the rule is justified by the view that the insurance company is simply spreading the risk of loss over a large number of people. If some of those people ‘rip off' the insurance company, people who make honest claims may find that the company's funds have been exhausted by the dishonest claims.

If in doubt, the insured is advised to tell the insurance company, in writing, so that there can be no dispute about it. The fact that the proposal form does not ask the relevant question may not help. The insured’s duty is to volunteer all facts which might affect the company's decision to insure them or not, and if so, upon what terms.

What the Insurer Must Advise

The insurer must give written notice describing the nature and effect of duty of disclosure before the contract of insurance is entered into. The insurer must advise in the proposal form what is relevant and important to it. If the insured receives advice from someone in the insurance firm, they should take a note of the employee’s name and what was said, just in case there is a dispute about it at a later date. If the matter is important, it is even better to confirm it by writing to the insurer.

The insurer must also give the insured, when requested, a statement of reasons for not accepting an offer to enter into a contract, cancelling a contract, or non-renewal of a contract of insurance. The insurer must also give reasons for offering to cover an insured on less advantageous terms on the subject matter of the contract.

Losses Deliberately Caused

It is an implied term of all insurance contracts that they do not cover losses wilfully caused by the insured. Some policies expressly say so. The practice did grow up in life insurance policies, however, that the company would pay following a suicide if the insured lived for more than, say, 12 months after the policy was taken out. Section 228 of the Life Insurance Act 1995 (Cth) states that a company need not pay in the case of suicide if the policy specifically stated as such. In other words, the right of the insured (or rather, their personal representatives) will depend on the specific conditions of the policy.

Reading Insurance Policies

While it is easy to say ‘policies should be read closely to ensure you realise what is and what is not covered’, even lawyers find the small print of insurance policies difficult to interpret. Some insurers have produced, for car and householder insurance, Plain English Policies which are much clearer. These policies should give rise to fewer disputes, provided lawyers and the courts can resist the temptation to ‘polish’ some of the plain English, That is, provided they interpret the document according to its spirit, rather than to its letter.

Some standard forms of cover have been prescribed by regulations made under the Insurance Contracts Act in 1985. The regulations prescribed standard cover under the following heads: motor vehicle insurance, home buildings insurance, home contents insurance, sickness and accident insurance, consumer credit insurance and travel insurance.

Obtaining Insurance

What Can Be Insured?

An insurance contract or policy is basically a bet between the insured person and an insurer that something, called the ‘defined event’ will or will not occur. To distinguish insurance from gambling the concept of ‘insurable interest’ was devised. There must be some kind of stake held by the insured in the subject matter of the insurance. For example, if racehorse owners bets a bookmaker that a horse will win at odds of 100 to 1: the transaction is a pure bet. If, on the other hand, the owners insure the horse against breaking its leg in the same race, the transaction is a contract of insurance. The owners have a property interest in the horse, the subject matter of the event. In placing a bet, the owners have nothing to lose except the stake and may gain 100 times that. Insuring the horse will not bring any gain to the owners, but will bring compensation if the horse breaks its leg.

Life Insurance

Not surprisingly, a person has an insurable interest in their own life. An insurable interest is also held by:

  • a parent or person acting as a parent, in the life of a child under 21 years of age;
  • a husband in the life of his wife;
  • a wife in the life of her husband;
  • any person in the life of another person upon whom they are wholly or partially dependent for support or education;
  • a company in the life of a company officer or employee; and
  • a person who has a financial interest in the duration of the life of another person. A creditor, for example, has an insurable interest in the life of a debtor, and a debtor has an insurable interest in the life of a joint debtor, but a debtor cannot insure the life of a creditor.

Health Insurance

There are several statutes - all Commonwealth, that govern health insurance. These are the National Health Act 1953; the Health Insurance Act 1973; the Private Health Insurance Act 2007; and the Medicare Levy Act 1986. Anyone who can afford health insurance can purchase health insurance. The premium (what you pay to secure health insurance) costs vary depending on the age and health of the applicant.

There are a number of health insurance providers in Australia. Some are more popular in different States. For example, St Luke’s is a popular health care provider in Tasmania, while HCF is predominantly based in NSW. There are common factors between all health insurance providers.
There are different types of cover – single, couple, single parent, and family cover. Each of these in turn can feature different excess amounts. Excess is how much you will need to pay if you are admitted to a private hospital. Excess is typically $250 or $500. The insurance amount is less for a higher excess.

Aside from different excess amounts, insurance cover can be either hospital cover or extras cover, or a combination of both. Common extras are dental. This means that you pay a weekly, fortnightly, monthly or yearly sum as your insurance and in return you may have subsidised dental visits, or free of charge visits every 6 months at dental clinics affiliated with your health care provider. The general characteristic of extra cover with health insurance is that they will pay part of your bill when you attend the dentist. This extends to other extras such as chiropractic, massage, osteopathy, and physiotherapy.

The prices of health insurance go up with the level of cover you want. The cheapest health insurance is basic hospital with a $500 excess, and goes all the way up to extras plus. Of course, the price also increases with the number of people who are insured. Each health insurance company has different packages and small variations in price. It is best to consult their websites, or visit an office.

The benefits of private health insurance include:

  • private rooms or nicer meals in some private hospitals
  • the choice of a particular doctor or a particular hospital and some or all of the expense being covered
  • access to elective care in private hospitals without long waiting periods. Elective treatments include hip replacement, cataract removal, and hernia or ligament repair. Public hospitals have waiting lists for elective care that can be long and may require living with a difficult condition for many months.
  • Partial or full cover for services not paid for by Medicare, such as chiropractic and dental care.

There are seven basic types of cover:

  • Public hospital cover: this covers a person for treatment as a private patient in a public hospital. This insurance does not provide any cover for treatment in a private hospital.
  • Basic hospital: this form of insurance excludes cover for certain treatments or conditions, and in return the member pays a lower premium. This is often called basic hospital cover, rather than full. Funds often exclude private hospital cover for obstetrics or heart surgery as part of a basic package.
  • One hundred per cent hospital cover with partial medical cover: this covers total hospital costs at hospitals with an agreement with the health fund. A gap payment for doctors’ fees that exceed the schedule fee may have to be paid.
  • Excess cover: in return for lower premiums (the amount paid for insurance) the member agrees to pay a certain amount up front if they use their private health insurance. For example, a member with a $250 excess will be required to pay the first $250 of the hospital bill if they use their insurance.
  • Extras or ancillary cover: extras cover is for non-hospital services such as chiropractic, physiotherapy, dental treatment, and optical treatment. Extras cover can be a separate insurance, or in addition to hospital cover.
  • Combination cover: combinations of cover can be purchased. For example, it would be possible to purchase a policy with hospital cover with $500 excess with extras cover for dental only.
  • Co-payment policies: co-payment policies require the the member contribute a certain amount per day of the total cost for their care while in hospital.

Complaints can be directed to the Private Health Insurance Ombudsman, if attempts at resolving complaints directly with a private health insurance provider have failed.

Liability Insurance

Examples of liability insurance are:

  • insurance against the legal liability of the occupier of property;
  • insurance against accidental damage to others for which the insured is legally liable, such as personal injury and property damage caused by driving motor vehicles;
  • insurance against liability for injury to an employee; and
  • products liability insurance - a manufacturer or distributor insures against the risk that their products will be defective, and against their liability to pay damages in respect of those defects.

An insurable interest exists if the insured will be subject to some legal liability if the defined event occurs. In two of the most important areas of possible liability, personal injury from the driving of motor vehicles (‘compulsory third party’) and work-related injuries to employees, insurance is compulsory.

Property Insurance

To obtain property insurance, a person must have a legal or equitable interest in the property. Thus, a person buying a car on hire purchase, although not the legal owner, has an equitable interest in the car which can be insured against loss. A person merely leasing a car (a ‘bailee’) can insure the full value of the car, even if that is more than the legal liability under the lease agreement. Other people with an insurable interest in property are:

  • mortgagors (the borrowers of money) and mortgagees (the lenders of money) of property;
  • trustees;
  • any other holder of a legal or equitable interest in property; and anyone in possession of property (the ‘bailee’) in circumstances where they may suffer economic disadvantage if the property is lost or damaged. For example, a dry-cleaner could insure against damage to clothes in their possession.

An indemnity policy is by far the most common type of insurance policy and yet its effect is often misunderstood. The insurance company agrees to make up the loss the insured has suffered, up to the ceiling stated in the policy. If a car, which has cost $14,000 new and had a second-hand value of $10,000 were to be destroyed, the insurance company would pay out only $10,000 even if the premium had been calculated on a value of $14,000. The policy basis for this seemingly sharp practice is the notion that people should not be encouraged to recover more than their monetary loss and that it is undesirable to allow a profit to be made by the insured out of the policy. Home buyers should check their house policy to find whether it is an indemnity policy.

The shortcomings of indemnity policies, especially in such 'consumer' insurance areas as motor vehicle property and householder's insurance, have led to a number of companies offering agreed value policies, often at higher premiums than comparable indemnity policies. Under an agreed values policy, the insurer agrees to pay the stated value of the car if it is stolen, or if the cost of repairs made necessary by an accident exceeds the stated value (should the repair cost be less than the agreed value the insurer agrees to pay the amount of damage or to repair the car). Some house and contents policies offer a similar deal.

Explicit words are necessary to create an agreed value policy - a rule which reflects the law's distaste for ‘profit making’ by means of insurance.
A replacement policy (sometimes called a New for Old policy) is a variation on the agreed value policy. The insurer undertakes to meet the full cost of replacement of anything covered by the policy which is stolen or destroyed. However, most policies of this type require the owner to insure goods for their full value, or at least 80% of the full replacement cost.

Owners who have under-insured their goods are subjected to ‘averaging’ when they make a claim.

Other Insurance

Commonplace examples of other insurances include personal accident and sickness policies (when the insurance company undertakes to pay a fixed weekly or monthly sum to a person who can't work because of injury or illness), fidelity insurance (when a person insures against the risk that an employee will defraud them), and travel insurance. There is really almost no limit to the kinds of risks against which someone can insure.

How to...

Renew a Policy

Many insurance policies are renewed from year to year. Insurers must, under the Commonwealth legislation, give 14 days notice of the expiry of the policy. If they don't, insurance cover continues at no cost to the policy holder unless and until a claim arises. Then, the policy holder will only have to pay the premium as and from the date of the claim.

No Claim Bonus and Excess

When making a claim, the insured should consider the effect it might have on their no-claim discount or excess. The no-claim discount began in motor car insurance as an attempt to reduce premium rates for drivers with accident free records, but it has now spread to house and contents insurance. The no-claim discount provides a powerful reason for not making a claim unless the loss has been a major one.

Make a Claim

A claim is usually made by writing to, calling on, or phoning the insurer, depending on the policy. The insurer should be notified of a claim as soon as possible. The policy usually gives a time limit for making claims which is sometimes quite short. If the insurer's rights have been prejudiced by the insured's failure to notify them of the claim, the insurer may be able to refuse to pay.

The insurer must prove that a condition in the policy has been breached if it is to refuse to pay. However, in the case of some exclusions (for example, if the policy states that the insurer doesn't have to pay if a car was being driven by an unlicensed driver) it is for the insured to show that they have a defence to the exclusion.

Most policies have a condition that the insured will not litigate, negotiate, pay, settle or admit any claim that is made against the insured person.

An insurer must pay under a policy even though the insured may have a perfectly valid action against a third party, for example, if the damage was clearly caused by the negligence of another driver. It is up to the insurer to pursue the claim against this third party.

Once an insurer has paid a claim to the insured, the insurer ‘steps into the shoes’ of the insured, and can take any court action that the insured may have been able to take against third parties. This is called subrogation.

It is an implied term in all policies that the insured will cooperate with the insurer in bringing actions against a third party, and will lend their name to the case. It is also an implied term that the insured will do nothing to prejudice the subrogation rights of the insurer (that is, that they will not admit liability or sign a release in favour of third parties). A release is a document by which the insured agrees not to sue another, normally in consideration for that other person agreeing to pay a certain sum in settlement of a claim. If an insured person breaches these terms, they are liable to the insurer for any damages the insurer suffers as a result.

Cancel a Policy

There are only limited circumstances in which a policy of insurance can be cancelled under the Insurance Contracts Act. They include:

  • failure by the insured to comply with the duty of utmost good faith or the duty of disclosure (see above);
  • breaking a condition of the contract by the insured;
  • a fraudulent claim made by the insured (see above).

In exercising the right of cancellation, the insurer must give, in the case of general insurance, no less than three business days notice, or in the case of life insurance, no less than 20 business days notice. On cancellation, it is usual for the insurer to refund any premium for the unexpired period of insurance.


What Is?

What is an Averaging Clause?

Where the insured person has taken out a policy on property, the insurance policy may stipulate that it is subject to an average. This clause is intended to prevent under-insurance, which causes a loss of premiums to the insurer. Under-insurance by one insured person effectively works against the interests of other policy holders, unless there is an averaging clause. Such a clause may, however, work as an injustice in times of high inflation. The following example will explain the effect of a ‘subject to average’ clause.

The policy holder may have insured the contents of their house for $15,000. The actual value of the contents is $30,000. There is a fire which destroys $15,000 worth of goods. At common law the insured is entitled to receive $15,000, as this is the loss suffered. However, if there is a ‘subject to average’ clause, the insured will only be able to recover $7,500, as they have only insured the goods for half their value.

‘Subject to average’ clauses are fairly common in house and contents policies. Some insurers will exclude, or not enforce, ‘subject to average’ clauses where the insured has taken out a policy on 80% of the value of the goods. It is best, therefore, to regularly check the value of the goods insured, and increase insurance cover if necessary.

Insurers and brokers have been known to encourage people to insure property for more than its full value. In this way, they obtain higher premiums and commissions and, since the policies are usually indemnity policies, they do not incur any greater liability. In travel insurances especially, brokers tend to take a rather sanguine view of the value of the property insured. Needless to say, when the claim is lodged, the insured may be required to prove the value of every item claimed.

What is a Cover Note?

People usually want to be covered by their insurance from the time they fill in the proposal form. It takes time, however, to prepare the policy documents. As proof that the insured is covered in the interim, insurers usually issue a ‘cover note’ which is valid for a specified period of time.

These are usually issued as soon as the proposal application is completed, before the issue of the policy documents. If the insurer decides not to accept the proposal, they can give notice to the proposer, and go ‘off risk’, even though a cover note has been issued and the premium paid. (Some policies provide that liability can be avoided by the insurer if the premium was unpaid at the time of loss or damage).

Cover notes seldom contain any policy conditions, and it is wise to ask for a copy of the policy document before paying the premium.


Exclusions Under Car Insurance

Some of the more common exclusion clauses prescribed in the regulations under the Insurance Contracts Act under this heading include the following:

  • “Policy to be invalid while the car is in an unsafe or unroadworthy condition”. Some of the more reasonable policies say that this exclusion does not apply if the defect could not reasonably have been detected by the insured, or if it can be proved that the defect had nothing to do with the accident;
  • “Policy to be invalid if car is being driven by an unlicensed driver” (unless the insured can prove the car was being driven without consent);
  • “Policy to be invalid if driver is driving while intoxicated” (unless car is being driven without insured's consent), although the insurer cannot exclude liability for conviction of a breathalyser offence alone (see under Traffic and Parking Offences in volume 9);
  • “Policy invalid if car used for particular businesses, or for hire, or reward”. Those in ‘high risk’ occupations (such as travelling salespeople, stock and station agents, driving instructors) are required to pay higher premiums for car insurance, and should not attempt to save money by misrepresenting their occupations. The ‘hire or reward’ exclusion has, on occasion, been waived by state transport ministers seeking to reassure people providing a car pool during public transport strikes. A court has held that an arrangement to provide a ride for another car owner, in the expectation that they would reciprocate, amounts to use of the car for hire or reward. It would, however, be a brave insurance company that relied on such an exclusion if an accident did occur during a public transport strike.

In addition, insurance offered to people renting cars is invariably confined to use of the car by named drivers. Accessories (such as radio, cassette player or air conditioning) are not usually insured unless specifically listed. Also the insurer must often approve all repairs, or repairs over a certain value.

Exclusion Clauses in House and Contents Insurance

Two of the more common exclusion clauses prescribed in the regulations under the Insurance Contracts Act Regulations under this heading are as follows:

  • Storm and Tempest policies usually exclude damage caused by sea, tidal wave, high water, flood, erosion, subsidence, landslip, and damage to retaining walls;
  • Some policies say they are conditional on the insured having insured the house and contents for their full value. Failure to comply with this condition could allow the insurer to refuse a claim. If it is complied with, the effect of an ‘averaging’ clause can be avoided (see below).

At common law, a breach of a condition or a warranty might have meant that the insured had no claim against the insurance company, whether or not that breach had anything to do with the loss that was suffered. Again the Insurance Contracts Act changed these rules. Sometimes, an insured can obtain an order from a court excusing their failure to comply with a condition or a warranty, and the insurer can usually only refuse to pay if there is some connection between the breach and the loss.

Because the insurance policy is a contract of the ‘utmost good faith’, the insurer can avoid the whole policy if there has been a fraudulent claim. A highly exaggerated claim about the value of insured goods may be held to be fraudulent. In any dispute that leads to a court case, this will be a question of fact to be decided by the trial judge, or (sometimes) by the jury. The duty of good faith still exists at the time of making the claim, and many of the questions asked in the proposal form will be asked again in the claim form.

If you reside in a flood prone area, you should insist on a policy which covers damages by flood.


General Insurance Issues

Complaints against insurers – whether the policy is for life insurance, motor vehicles, home and contents, any type of insurance, can be initiated through the Commonwealth Financial Ombudsman Service. Of course, it is best to contact your financial service provider – i.e. your insurer first, before initiating a complaint with the Ombudsman. If you want to lodge a dispute, simply go to the Financial Services Ombudsman website

Insurance Broker Complaints

There is an insurance broker dispute facility which provides clients of life and general brokers with free advice and assistance where they are unable to get a satisfactory response from their broker. See the online complaint service

Australian Prudential Regulatory Authority (APRA)

This is a statutory authority which is the prudential regulator of banks, insurance companies and superannuation funds. See the APRA website for more information.

Private Health Insurance

Complaints regarding private health insurance providers should be directed to the relevant ombudsman.

Insurance Brokers

Insurance brokers who hold themselves out as having professional expertise to assist in arranging contracts of insurance, must be registered.  They will, except in limited circumstances, always act as the agent of the insured or the intending insured.  Thus they will be professionally liable for any loss or damage suffered by a client where it is associated with their negligence in arranging or failing to arrange insurance.

Where a broker arranges insurance on an insured’s behalf, the broker or other intermediary must inform them of the name of the insurer involved.  If an insurance broker, agent or other intermediary receives money from the insured by way of a premium and then defaults, the insurer must make up the loss.  In the same way, money paid by an insurer to any person or organisation which is intended to be paid to the insured, will continue to be the responsibility of the insurer if that organisation or person defaults.

It is important that the insured should read, and check the accuracy of, everything that the intermediary writes on their behalf, particularly if they are asked to sign it.  If something is written down incorrectly, trouble is likely to result, and it may be that the policy will not be worth the paper it is written on.  In short, always read the document before signing it, and do not sign it if it is in any way inaccurate.


This does not constitute legal advice and the Tasmanian Law Handbook should not be used as a substitute for legal advice. No responsibility is accepted for any loss, damage or injury, financial or otherwise, suffered by any person acting or relying on information contained in it or omitted from it.