INSURANCE By Steve Wright
Contracts set in stone or ‘living documents’? The sanctity of insurance contracts, especially in areas of trauma, is vitally important, says Steve Wright.
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es, I’ll admit, it is many years ago since I was a law student. I studied contract law, but I clearly remember that one of the founding principles of contract law is that contractual provisions needed legal enforcement, even if the outcome is inconvenient to one of the parties to that contract. In other words, contracts were set in stone. These days, however, contracts appear to
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be increasingly regarded as something to be ignored or amended when it doesn’t suit us. We have laws prohibiting unfair contractual terms and some are justifiable, but not all contractual terms should be outlawed or prescribed and, in my view, the sanctity of contracts is important for creating certainty. Certainty is essential to modern commerce and civilisation and without it we would not be where we are today.
UNDERSTANDING ISSUES Recent events in Australia highlight this issue for insurance. Media reports of ‘concerns’ that trauma policy definitions were not updated and of claims not paid when the client clearly had a ‘heart attack’ highlight this issue. While I don’t condone the alleged bad faith conduct, I think it is important, as advisers in particular, to understand some issues. The first is that insurance is intended to pay
