• An insured event
  
• Proximate cause
  
• Insurable interest
  
• Proof of loss / damage
  
• Contribution

This is just an overview. The law in this area can be quite tricky and cases can be won and lost on what may seem the splitting of hairs. For a legal opinion, see your solicitor or refer to our Legal Help page.

6. What triggers a claim?

There may be certain conditions to satisfy before considering whether a claim exists under a policy. These could be loosely grouped into: conditions precedents and conditions subsequent.

Conditions precedent may include the insured's obligation to not admit liability to another person in respect of the event, to immediately notify the Police if applicable and/or to notify the insurance company as soon as possible of the intended claim. If these conditions are breached, it is not usually possible to deny liability, there are cases where a gross breach will enable the insurer to reduce its payout.

Once the claim has been submitted, it is a condition subsequent duty of the insured to provide reasonable information and assistance, in order for the insurer to properly process the claim. Again, if the failure to co-operate grossly prejudices the insurer, it may wish to reduce the claim payment.


6.1 An insured event

As discussed in About Insurance - Personal Insurance, the accidental loss policy on the face of it covers any accidental loss or damage event, subject to policy exclusions, conditions and so on. On the other hand, the defined events householder policy (for example, or say the fire and perils business policy) covers certain events such as fire, storm and so on. For the policy to be triggered, such an event must firstly take place. That is for the insured to prove.

6.2 Proximate cause

The loss or damage claimed must be proximately caused by the insured event.

In general terms there are three categories of perils:-

1. Insured perils
2. Excluded perils
3. Uninsured perils (not mentioned specifically in the policy at all).

Speaking broadly, it is required that an insured peril take place, directly giving rise (in an unbroken sequence of events) to loss or damage. If loss or damage was also caused by an excluded peril it would be necessary to identify and separate that damage caused. If the damage is not separable, generally the insurer would need to pay the entire claim.

6.3 Insurable interest

It was the case that an insured had to have an insurable interest in the subject-matter insured in order to claim. This principle is still relevant, but has been modified, including by the Insurance Contracts Act 1984 (Cth) ("the Act").

It is no longer the case that insurable interest must necessarily exist at the time the policy was entered into, at the risk of voiding the policy from the beginning.

Also, an insurer cannot refuse a claim only by reason that at the time of loss the insured claiming did not have an insurable interest in the subject matter of the claim.

A person can now claim under a policy, while not being specifically named as an insured in the policy documents.

6.4 Proof of loss

In addition to the legal burdens on the insured (and of course the insurer) an evidential burden is placed on the insured to establish loss. It is the fundamental principal of law that any claimant must establish their claim with evidence. If evidence is not obtainable the insurer is not obliged to pay.

6.5 Contribution

In the cases of reinstatement or replacement ("new for old" or "R & R") policies, the contribution principle may not be invoked. However, if policies are written on a true "indemnity" basis, the indemnity principle extends only to returning the insured to the position immediately prior to the loss or damage.

This means that allowances for wear and tear and so on are able to be applied in paying the claim and the insured must contribute the rest of replacement cost. In such cases the insurer should not insist the insured replace the damaged item, but should rather pay the indemnity by cheque.