High Court considers the effect of an automatic reinstatement clause

25 October 2013

Court Decisions

The HC in Wild South Holdings Limited v QBE Insurance Ltd analysed preliminary questions as between the parties and  provided the following preliminary answers:

  1. When considering the application of an automatic extension clause on a purposefully under insured policy he found that on the policy wording the insured and insurer had a reasonable time to give notice to cancel the reinstatement, if notice is not given in a reasonable time then it will be too late for either party to cancel the automatic reinstatement.

  2. The insurer sending the policy schedules and policy wording to the broker is not sufficient to discharge the precondition that the insurer clearly informs the insured in writing the nature and effect of the average condition in the policy.