An April 2024 judgment of the Federal Court of Australia decided that a subcontractor on a contract site was entitled to recover under the principal contractor’s insurance policy because it was a party “for whom the insured undertakes to insure for their respect rights, interests and liabilities”. In doing so, the court resolved conflicting provisions under the policy dealing with “who is insured under this policy”.

The policy contained the following conflicting provisions:

• “The persons or organisations that are covered by this policy are shown on the Insurance Certificate. In this policy, those persons or organisations are referred to as ‘you’ or ‘your’. We will extend the policy to cover other persons or organisations requiring cover under this policy if you have advised us of them, and we have named them on the insurance certificate.”
• ‘You or your’ means any person or entity shown on your insurance certificate as the insured.
• The insurance certificate identified the “insured” as the named insured, subsidiaries and other parties, “and all persons for whom the insured undertakes to insure for their respective rights, interests and liabilities”.

An employee of the main contractor, who was a professional carpet layer, sustained personal injuries while climbing over a retaining wall. He sued the contractor who claimed against the employer’s insurance policy which covered the main contractor, and the parties described above.

The court restated the usual principles of interpretation of an insurance policy that the policy must produce a commercial result, give a businesslike interpretation, and have regard to the contextual framework.

The inclusion of the reference to all parties made it plain that the concept of “the insured” under the policy extended to parties for whom the employer undertook to arrange such cover. The contractor, who was sued by the injured party, claimed to be such an insured. The fact that the extension in the schedule requiring the insured to be named did not mesh seamlessly with the policy wording did not assist the insurer. There was no need for the contractor to be specifically named as required by the extension contained in the schedule as opposed to being described by reference to a class of persons. The policy widened the scope of the specific insureds under the policy and “the insured” included the contractor who was therefore insured against liability to the injured claimant. Because the contractor was insured under the words quoted, it therefore fell within the scope of the expression “you/your” used in the policy.

Precise naming of the insured is one of the most important, and often overlooked, term of a policy.

Hansen Yuncken Pty Ltd v The Hollard Insurance Company Pty Ltd [2024] FCA 398 (24 April 2024)