Case Note: The Lesser of Two Evils: FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd

Abstract

The High Court in Australian Hospital Care v FAI has laid to rest any confusion which previously arose in relation to the application of s 54(1) of the Insurance Contracts Act (1984) Cth to "claims made and notified" policies of insurance. Contrary to previous authority, in the context of a failure by an insured to take advantage of a clause extending the scope of cover to future claims, the majority held that this was an omission to which s 54(1) would apply. In the course of the judgment, the majority rejected the previous "inaction/omission" dichotomy, there Honours rather preferring a test focussing on the character of the policy held by the insured.