The NSW Court of Appeal delivered judgment in Globe Church Incorporated v Allianz Australia Insurance Ltd [2019] NSWCA 27 and found that indemnification under a policy for insurance accrues at the time of the insurable event and not when a claim was assessed or determined. The Court held that the limitation period for an insurable event under a policy runs from the date of the damage and not when indemnity was refused by an insurer.

Background

Globe Church Incorporated (“Globe Church”) sustained property damage to its premises as a result of a flood which occurred between 8 June 2007 and 31 March 2008.

Globe Church held a policy with Allianz and Ansvar (“the insurers”) within the period which the damage occurred. Globe Church lodged claims under a 2008 Policy and 2009 Policy, and the insurers denied coverage in 2011.

Proceedings were commenced in the NSW Supreme Court by Globe Church in 2016, some 8 years after the date the damage was said to have occurred. The proceedings were commenced against the insurers for an alleged breach of contract for denying indemnity under the policy.

The proceedings were referred to the Court of Appeal to determine whether the commencement of proceedings in the Supreme Court of NSW was barred due to the applicable 6-year limitation period.

Decision

The Court of Appeal held that the limitation period commences from the date of the occurrence of damage and not the date the insurers communicated a denial or refusal of an insurance claim.

The key finding made by the Court were as follows:

  1. A cause of action accrues on the happening of an event of property damage.
  2. In accordance with Section 14(1) of the Limitation Act 1969 (NSW) (“Act”), any claim for indemnity must be made within 6 years from the time the damage occurred. As the damage is said to have occurred between 8 June 2007 and 31 March 2008, commencing proceedings some 8 years later does not coincide with the requirements under the Act and accordingly the plaintiff in this case is barred from the commencement of proceedings.

Implication

This case provides a limitation defence for insurers to claim if proceedings are not commenced by an insured within 6 years of the date of the loss. It is as equally important for insured person under a policy to ensure that if they are unsatisfied with a decision made by an insurer, the insured has 6 years to commence proceedings and those proceedings must be commenced within 6 days of the date the damage occurs.