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Leaky home liability insurance

By Andrew Steele - 1 Mar 2012

If a party facing liability in a "leaky home" case has liability insurance, they can involve their insurance company in the litigation.  In cases where this happens, a key issue is whether the other parties facing liability can seek recovery from the insurance company directly, rather than from the insured party. 

Such attempts can increase the time it takes for cases to be resolved, particularly if the insurance company's lawyers take an aggressive stance, and may make early settlement less likely.  A recent High Court decision has confirmed that these sorts of claims against insurers can only be brought in special circumstances.

In Chow v Thomson the High Court considered an application by the Franklin District Council to join the insurer of two building contractors as a defendant.  The insurer was already involved in the proceeding but the Council had brought the application so they could claim against the insurer directly.

The Court recognised that it could not join the insurer as a defendant if it was possible for the Council to bring its claim against the insured party, i.e. the contractors.  The Court determined that the Council could bring its claim against the contractors directly, and therefore dismissed the application to join the insurer as a defendant.

This decision shows that a claim cannot be brought against an insurer if a claim against the insured party will enable recovery.

If you would like more information about this or leaky buildings in general please contact us.

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Andrew Steele

 

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