Can an insurer revise their position?
For people injured in a motor vehicle accident in NSW, there are strict time frames for the making of a valid claim for compensation. The 3 most important dates (from the incident) to remember are:
- 28 days – the need to lodge with the CTP insurer an Accident Notification Form;
- 28 days – the need to notify the police of the incident and obtain an event number (unless they attended the scene, and
- 6 months – the need to lodge a Personal Injury Claim form.
If the above are complied with, then the insurer must (upon receiving your personal injury claim form) make a decision about liability within 3 months.
This does not give the insurer a lot of time, and sometimes they fail to respond within 3 months.
What happens if the insurer initially accepts liability, but later, changes its mind? Can the insurer deny a claim in that circumstance?
The Gabriel & Mordue decisions
The fundamental principle is that the insurer IS bound by their formal Section 81 Notice. It can only amend that notice IF it is to change their decision from denying liability to accepting liability.
Accordingly, if the insurer accepts liability under a Section 81 Notice, any amended notice served at a subsequent time is of no effect.
Even if the insurer makes an honest mistake, it’s too late to amend.
There are however, exceptions which make this situation complicated. The two major exceptions are:
- The insurer can amend its Section 81 Notice to deny indemnity under the policy, and
- The insurer can go against their Section 81 Notice in Court proceedings.
Gabriel
In this case, the insurer admitted liability with an allegation of contributory negligence.
However, contrary to the admission of liability, the insurer attempted to change its position by denying liability in the pleadings once the matter went to Court.
In a 2:1 decision the NSW Court of Appeal held that the Section 81 Notice admissions did not bind the insurer once Court proceedings were commenced.
Modue
In this case a person was injured in a motor vehicle accident off road at a car rally.
The insurer at first admitted liability but later denied the claim as the CTP policy did not respond to loss for ‘off road’ accidents.
In a 2:1 decision the NSW Court of Appeal held that the ORIGINAL Section 81 Notice admissions of ‘liability’ were different to admissions of ‘indemnity’ and thus the insurer, QBE could rely on the amended notice.
Observations
As can be seen, the principle that an insurer cannot go against its Section 81 Notice has qualification. If the insurer wants to, and can, they will try and get your claim into Court so that they can get around their notice as they’re permitted to.
People who are injured in a motor vehicle accident in which liability is not in issue should note that their claim doesn’t usually need to go to Court to be assessed but will go through an administrative process called CARS. If this is the case, then this forum will enforce against the insurer their 81 Notice.
However, an insurer does not have to accept the decisions of CARS and if that is the case, they can go to Court where their Section 81 Notice will not prevent them from denying liability (this is predominantly in relation to late claims).
That being the case, it is advisable that you contact a lawyer or firm with experience in Motor Vehicle accident claims so that you can avoid falling into the many traps that exist.
Timothy Driscoll
18 October 2016