The limitation period for making a claim against an insurance company

Contributed by Greg Pynt and current to 1 September 2005

In Western Australia, the limitation period for a cause of action against an insurance company founded on a contract of insurance is 6 years.

This means that if you do not issue Court proceedings against the insurance company within 6 years, you will lose the right to do so. (The 6 year limitation period runs when your cause of action against the insurance company accrues. In contract, the cause of action accrues on the date on which the contract is breached.)

The law is not clear in relation to when an insurance company breaches the insurance contract and therefore when the 6 year limitation period begins to run. At the earliest, it will be when your loss occurs. That is because at the moment you suffer the loss, the insurance company becomes liable to make good your loss.

In the case of a first party insurance contract, you will usually suffer loss when the event occurs that causes your loss (for example, when your house or car is damaged or you are injured). On the other hand, in the case of a third party (liability) insurance contract, you will usually suffer loss when your liability to the third party is established by judgment, arbitration award or settlement, not at the earlier time when the event occurs that gives rise to your liability.

Do not assume the relevant limitation period will be 6 years. The limitation period may be shorter in some circumstances. Advice should be sought about this issue if you intend to make a claim.

TIPS

Make sure you:

• read the insurance company’s Policy before you apply for insurance to make sure it meets your insurance needs;
• complete the Proposal for insurance accurately;
• comply with the Conditions in the Policy whilst the insurance contract is in force.
If you think you need help with any of the above, ask an insurance broker to arrange insurance for you, advise you what to do when you have insurance and help you make a claim if it becomes necessary to do so. That is what insurance brokers are paid to do.

Most importantly, keep in mind that the duty of utmost good faith requires you to be honest and fair in your dealings with your insurance company and your insurance company to be honest and fair in its dealings with you.