FAI General Insurance Company v Australian Hospital Care

FAI General Insurance Company v Australian Hospital Care

FAI GENERAL INSURANCE COMPANY LTD V AUSTRALIAN HOSPITAL CARE P/L

[2001] HCA 38

High Court of Australia – 27 June 2001

FACTS

A former patient of the Hospital informed the Hospital that he contemplated bringing an action against the Hospital and its surgeon for negligent treatment given while he was a patient at the Hospital.

The Hospital did not inform its insurer, FAI of the potential claim because the matter was not pursued.

The former patient commenced proceedings against the Hospital the following year but the Hospital’s professional indemnity policy for negligence claims with FAI had expired and replaced with a new professional indemnity policy taken with Lloyd’s Underwriters.

FAI claimed that s54 of the Insurance Contracts Act 1984 (“the Act”) precluded it from being liable for claims made by the former patient which was outside the period of cover under the policy.

ISSUES

Whether FAI could refuse to pay for the former patient’s claim against the Hospital when the Hospital failed to notify FAI of the claim within the period of cover under the insurance contract.

FINDINGS

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