Last updated 1 September 2022
A claim can be broken down into a number of elements: event, proximate cause, insured property and proof of ownership and value.
The event that gives rise to the claim is usually thought of as a single sudden one. While this is often the case, it need not always be so. For example, an event may be a steady drip from a shower pipe behind a bathroom wall, the damage of which occurred and remained hidden for some years.
The loss or damage must be proximately caused by an insured event. For example, a piece of jewellery may have gone missing, but it is for the insured to prove that it was in fact stolen. Similarly, where a house has been damaged, it is the responsibility of the owner to prove that the damage was caused by an event that is covered by the insurance policy (e.g. a fire or storm).
The property of the claim, which has been lost or damaged, may not be covered, either because it falls outside of what is defined (e.g. the home building when only contents are insured) or it is excluded (e.g. a motor vehicle in a claim under a home contents policy, even though it was stored in the home building).
Insurable interest and third-party beneficiaries
Traditionally an insured needed to show that they had an ‘insurable interest’ in respect of insured property at the time they entered into an insurance contract and at the time they made a claim. For contracts of general insurance governed by the Insurance Contracts Act 1984 (Cth) (Insurance Contracts Act), an insurable interest is no longer required. What the insured will normally need to show is that they have suffered economic loss.
It is common to name third-party beneficiaries in an insurance contract. For example, a mortgagee may be named in a home insurance policy or a principal may be named by a subcontractor in a public liability policy. Third-party beneficiaries are entitled to claim under the insurance contract and, like the primary insured, owe the insurer a duty of utmost good faith when making that claim.
Proof of ownership and value
It can be distressing when the subject of an insurance claim is either gone or destroyed, and proof of the insured ever owning it and its value are questioned by the insurer. Keeping purchase invoices, ownership manuals and other documentation is advisable. However, making statutory declarations under the Oaths Act 1867 (Qld) or providing photographic evidence of ownership may be sufficient.