Allianz Australia Insurance Limited v Rawson Homes Pty Ltd [2021] NSWCA 224

In 2021, the New South Wales Court of Appeal overturned the primary judge’s ruling in Allianz Australia Insurance Limited v Rawson Homes Pty Ltd [2021] NSWCA 224. The case considered policy wording in relation to a deductible payable following damage caused by hailstorm to houses under construction.

Facts

In February of 2017, a hailstorm passed through Sydney and caused damage to the roofs of 122 houses under construction owned by Rawson Homes. Rawson Homes held an insurance policy with Allianz and filed a claim for the damage as a result of the hailstorm. The claim was accepted by Allianz. However, a dispute arose between the parties with respect to the deductible payable under the policy.

The policy provided that a deductible of $10,000 would apply for “Any One Event” applicable to “Material Damage” claims for “Major Perils”. Allianz’s position was that the deductible should apply for each house that was damaged. On the other hand, Rawson Homes’ position was that the deductible should only apply once and cover all the houses damaged, as the hailstorm was one “event”.

First instance

At first instance the Court decided in favour of Rawson Homes, holding that only one deductible of $10,000 was payable in relation to the claim for damages to the 122 houses.

The Court considered that the hailstorm was one event within the meaning of the deductible clause, which read that the deductible would be payable “for all claims arising out of one event or occurrence”.

Appeal

Allianz appealed decision. At issue on appeal was whether the deductible applied only once, or to each of the building contracts for the 122 houses under construction.

On appeal, the Court found in favour of Allianz, holding that the deductible should apply to each of the 122 houses damaged.

The Court based its decision on an interpretation of the insuring clause. The insuring clause held that cover would be provided for contract works against an indemnifiable event. Based on this, the Court of Appeal held that the deductible should apply to each insured contract, meaning each individual house damaged in the hailstorm.

Key Takeaways

This case demonstrates how insurance contracts with defined terms capable of multiple interpretations can have significant financial consequences. This case also emphasises that the interpretation of insurance policies will come down to the ordinary and natural meaning of the words.