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There are two issues that arise in relation to the resolution of insurance disputes. The first is who bears the burden of proof in relation to a matter in dispute. The second concerns various provisions governing the resolution of disputes under contracts of insurance. Obtaining proper legal advice from a Commercial Lawyer may be greatly beneficial if you are involved in an insurance dispute.

In accordance with ordinary notions in contact law, the insured has to prove the existence of the contract, including the fulfilment of any requirement that is made a condition precedent to that contract. The standard of proof is on the balance of possibilities. In the case of an insurance contract, some difficulty arises in the case of a basis of contract clause. However, the non-fulfilment of a condition of that type does not prevent the contract from coming into existence; it only entitles the insurer to terminate it. A basis of contract clause is simply a particular type of warranty.

The insured also has to prove the occurrence of a loss covered by the insurer's general promise to pay the amount specified in the contract. Although the terms of the contract may qualify the general requirement in a variety of ways. The question that arises is whether the burden of proof in relation to a qualification rests on the insurer or the insured. The insured must establish the terms of the contract that are necessary to establish that his or her claim is covered by the contract. The insured also has to prove that his or her loss is covered by the contract. For example, if the contract only covers losses caused in particular ways, the insured must prove that his or her loss was caused from one or other of those causes. The insurer does not have to prove that the loss arose, instead, from some other cause.

However, the insurer may introduce evidence of that type that casts doubt on the insured's claim. The fact that the insurer cannot prove on the balance of probabilities that the insured's loss arose from that other cause is irrelevant. The insured must still prove his or her case on the balance of probabilities. In rare cases, the court may reasonably decide that, even though the insurer has been unable to establish that the loss arose from the “other” cause, the insured has also failed to establish that the loss arose from a cause covered by the contract. It may generally be agreed that the insurer has to prove that a claim falls within an exception or exclusion or is the subject of fraud. However, the burden shifts to the insured to establish that the claim falls within a further exception to that exception or exclusion. Proper legal advice in from a Commercial Lawyer may be of great assistance in this respect.

Normally, insurance disputes are resolved by the courts. However, many insurance disputes are now resolved through other alternative dispute resolutions mechanisms. The prime provider of alternative dispute resolution in Australia is the Financial Ombudsman Service. This service is the result of the merger of three bodies: the Banking and Financial Services Ombudsman, the Financial Industry Complaints Service, and the Insurance Ombudsman Service. Alternatively, some contracts of insurance contain a clause which makes the insurer's liability conditional on submission of the dispute to arbitration. In the case of substantial claims, arbitration may be an effective way of resolving a dispute quickly. In the case of smaller claims which are typical of domestic insurance, the additional costs of arbitration may operate as a deterrent to the insured pursuing a claim. Proper legal advice in from a Commercial Lawyer may be of great assistance in this aspect of insurance disputes.

If you would like further information or wish to discuss your insurance dispute matter with us please do not hesitate to contact us by telephone on (02) 9233 4048 or by email to info@navado.com.au. 

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