The Insurance Studio

This endorsement is all kinds of wrong...

It was relied upon by an insurer who said any cover available to ACME (not its real name!) was limited to principal’s cover — that narrow protection typically tied to work performed by an insured for their principal.

But it wasn’t to be. And the drafting lessons are important.

✨ First, the endorsement is, well, confusing — even the court that reviewed it, ever so politely, called it “somewhat poor.”

If the intent was only to offer ACME principal's cover, why include a reference to “interested party”?

Perhaps it was to satisfy a market expectation, since the insured had agreed (in a separate contract) to add ACME as an “interested party"… entitled to the benefit of indemnity under Bright Spark’s insurance.

But that obligation didn’t bind the insurer to do so — the endorsement didn’t seem to match the obligation in any event — and so the inclusion of ‘interested party’ on the schedule just set the stage for future, costly dispute.

✨ Second, according to the policy’s original terms:

• ACME automatically had principal’s cover regardless of any endorsement.

• And significantly, the description of “insured” — which extended to “all parties for whom Bright Spark undertakes to insure” – gave ACME a second, *broader* pathway to cover.

Cover that wasn’t limited to any principal’s extension.
Cover that meant ACME was an insured in its own right — for its own independent acts of negligence (happy to explain why — it's an interesting point!)

✨ And then there’s the sting in the tail: the endorsement was added *after* the policy containing these terms was issued.

But insurers can’t unilaterally reduce cover once they've been bound — any adjustment to their legal promises has to be mutually agreed.

So did this endorsement miss its objective? Did it fail to 'mesh' with the policy’s terms? Did its language and timing invite scrutiny and dispute?

Yes, on all counts.

Good drafting is about clarity, purpose and precision. Shortcuts, assumptions, ignorance of the law, and overlooking how existing policy terms interact always lead to problems.

Before adding any endorsement, it pays to stop and ask:

• What is its true function?
• How will it fit with the wording?
• And what language best articulates that intent?

And for anyone who reviews and accepts endorsements for their customers, the same care and questioning matters just as much — for their sake.

05.11.25

What if you promise insurance that can't be obtained?

If your client agrees to take out insurance for another — and they don’t — the fact that it was difficult, or even impossible, to obtain will typically be no answer to a breach of contract claim.

That was the outcome in a 2024 Supreme Court case involving a serious personal injury.

With A and B both responsible, B turned to A’s broadform policy to cover its liability share (almost $230,000). But the policy only insured A.

So B sued A for breach of contract. Based on the promises you see here 👈

As part of its defence, A’s broker gave evidence that he was unaware of any insurer who would have extended A’s policy to cover B for its own negligence, or would have named B as an additional insured:

“…this segment of the insurance market is small.”

🚨 But the Court gave this evidence short shrift, judging it “irrelevant” and “inadmissible.”

Why? Because whether cover was difficult (or even impossible) to obtain doesn’t matter. What matters is the CONTRACTUAL OBLIGATION agreed to by the parties.

So when reviewing customer contracts (or policy wordings for that matter), remember:

• The actual words of the contract always come first.

• Terms are understood objectively, in light of context and purpose.

• If a clause is unambiguous, it will be given its plain meaning. Evidence of “surrounding circumstances” (like cover availability), or what you think a term should mean, is irrelevant.

B was successful in its breach of contract claim.

A was left to pay not only its own share — but B’s as well (an expensive lesson)!

THE TAKEAWAYS:

⭐ Let your clients know the words they sign up to are critical — and will be given primacy in any dispute.

⭐ Encourage them to involve you early in pre-contractual insurance and risk discussions, so you can advise on coverage availability and terms.

⭐ If you’re only involved after the fact (and contractual obligations point to uninsurable risks), flag them immediately to protect your position and help your client understand the insurance exposures at hand.

26.09.25

How did this end up on a policy?

Here’s an endorsement I came across on a liability policy recently:

“Indemnity to Principal: any Principal to whom the Insured is carrying out work and against such claim is brought arising from an Occurrence arising in connection with the carrying out of such work.”

Ummm… sorry?

I can see what the author was trying to do here. But doesn’t it leave you more confused than certain about what’s being offered?

And that’s a problem—because confusion invites dispute.

A few thoughts immediately come to mind when considering this term:

🔹 𝗪𝗵𝗼 𝘀𝗽𝗲𝗮𝗸𝘀 𝗹𝗶𝗸𝗲 𝘁𝗵𝗶𝘀? In trying to mesh the endorsement with the policy’s main insuring clause— (a good thing!)— the author has unfortunately ended up a bit tongue-tied. Effective drafting communicates—clearly, unambiguously, and using ordinary language harmonious with the wording—what cover is being provided.

🔹 𝗪𝗲𝗿𝗲 𝘁𝗵𝗲𝘆 𝗰𝗹𝗲𝗮𝗿 𝗼𝗻 𝘄𝗵𝗮𝘁 𝘁𝗵𝗲𝘆 𝘄𝗮𝗻𝘁𝗲𝗱 𝘁𝗼 𝗰𝗼𝘃𝗲𝗿? The muddled drafting suggests otherwise. And while they may later claim they never meant to provide “wide” or "narrow" principals cover, subjective intention is typically irrelevant. What matters is what’s written—in black and white—in the policy.

🔹 𝗗𝗶𝗱 𝘁𝗵𝗲𝘆 𝗮𝗽𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗲 𝘁𝗵𝗲 𝗹𝗲𝗴𝗮𝗹 𝘄𝗲𝗶𝗴𝗵𝘁 𝗼𝗳 𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗶𝗻𝗴 𝗽𝗵𝗿𝗮𝘀𝗲𝘀 𝗹𝗶𝗸𝗲 “𝗮𝗿𝗶𝘀𝗶𝗻𝗴 𝗳𝗿𝗼𝗺” 𝗮𝗻𝗱 “𝗶𝗻 𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗶𝗼𝗻 𝘄𝗶𝘁𝗵”? These little words can dramatically narrow or broaden coverage. By departing from usual wording, the scope of cover may also have shifted in a way unintended.

✍️ Good drafting starts with a solid grasp of policy contract fundamentals.

It’s not glamorous, but it’s essential.

And like any skill, it can be learned. The more we practise, the better we get — at writing, negotiating or accepting — endorsements and insurance terms that actually get the job done.

This was a valiant attempt... but it misses the mark.

So let’s keep coming back to the tools that build effective policy terms:
• clarity of intention
• expressed in ordinary language
• consistent with the policy’s context and wording
• judged from the objective (reasonable person’s) viewpoint.

19.09.25

What's in a name?

If you work in insurance, you already know: getting the insured exactly right can be harder — and more important — than it looks.

I saw several brokers and underwriters expressing their frustration last week on LinkedIn about a recurring issue: the number of clients — and insurance professionals — who can’t correctly identify the entities they want insured.

Is it a company or a trust? Who’s the trustee? Do they use an ABN?

“This is insurance 101!”, someone commented.
Another admitted, “I always get confused on this.”

And that got me thinking — this is 𝘧𝘶𝘯𝘥𝘢𝘮𝘦𝘯𝘵𝘢𝘭, but it’s also confusing if no one has ever taken the time to explain the basics.

🤔: But surely if you get it wrong, the insurer will just correct the policy?

Well they might.

Courts can order the later insertion or correction of an insured name that was originally omitted or misstated.
In some cases, the insurer may be ‘estopped’ from denying cover due to the parties’ conduct and shared intent.

⚖️ But would you really want to take that risk?

The starting point for interpreting any policy is always the 𝘸𝘰𝘳𝘥𝘴 in the policy itself.

The law of rectification — especially on the grounds of mistake — is complex and, quite frankly, unforgiving.

Australian courts have been very reluctant to depart from written terms — or rewrite them. When they do, the burden of proof is "very heavy". The party seeking the change must prove there was a clear, common agreement between the parties — and this evidence will be intensely scrutinised.

And they're just some of the issues you face if you do make it to court...

🔥 A recent UK case involving a multimillion-dollar fire claim is a stark reminder of the rest.

The BI insurer declined to cover the corporate operator of a hotel because the policy only named the family company that 𝘰𝘸𝘯𝘦𝘥 the extensively damaged building — not their separate company that actually ran the affected business.

The ‘uninsured’ company SUED BOTH THE INSURER AND THEIR BROKER — and all parties endured over four years of litigation, costs and damage.

✅ The bottom line?

We need to ensure, at the time a policy is placed, that insured details are accurately and precisely captured in the wording.

And that starts with a working knowledge of how business structures — like trusts, companies, partnerships & sole traders — operate as 𝘭𝘦𝘨𝘢𝘭 𝘦𝘯𝘵𝘪𝘵𝘪𝘦𝘴 when it comes to insurance contracts.

If you're ever unsure, don’t guess. Reach out for help.

09.09.25

Tempted to read the exclusions first? Here's why that's a mistake

Time and again, I hear insurance professionals admit that the exclusions are where they start when trying to work out what a policy covers.

🔹 Sometimes it’s because there is a claims dispute.
🔹 Sometimes it’s to help give clients pre-claims advice.

On the surface, it feels logical. Go straight to the source.

But here’s the problem: 𝐭𝐡𝐚𝐭 𝐚𝐩𝐩𝐫𝐨𝐚𝐜𝐡 𝐢𝐬 𝐟𝐫𝐚𝐮𝐠𝐡𝐭 𝐰𝐢𝐭𝐡 𝐝𝐚𝐧𝐠𝐞𝐫.

𝐖𝐡𝐲 𝐄𝐱𝐜𝐥𝐮𝐬𝐢𝐨𝐧𝐬 𝐀𝐫𝐞𝐧’𝐭 𝐭𝐡𝐞 𝐖𝐡𝐨𝐥𝐞 𝐒𝐭𝐨𝐫𝐲

Here’s the rub.

Our Courts have been very clear: policy terms – just like those found in any commercial contract – must be read 𝑖𝑛 𝑐𝑜𝑛𝑡𝑒𝑥𝑡.

That means insuring clauses and any limiting terms must be read together, in a “harmonious way”, so that “due effect is given to both.”

If you simply concentrate on a single term, in isolation to all others, you’re not seeing the full picture. And that’s a problem.

𝐓𝐡𝐞 “𝐇𝐢𝐞𝐫𝐚𝐫𝐜𝐡𝐲” 𝐨𝐟 𝐏𝐨𝐥𝐢𝐜𝐲 𝐓𝐞𝐫𝐦𝐬

It can be an even bigger problem where exclusions are concerned. And lead to serious mistakes.

⚖️ The NSW Court of Appeal recently reminded us that with policies: “𝑇ℎ𝑒 𝑠𝑡𝑎𝑟𝑡𝑖𝑛𝑔 𝑝𝑜𝑖𝑛𝑡 𝑖𝑠 𝑡ℎ𝑒 𝑖𝑛𝑠𝑢𝑟𝑖𝑛𝑔 𝑐𝑙𝑎𝑢𝑠𝑒.”

And that’s because there is an inherent hierarchy of terms in an insurance policy.

𝐍𝐨𝐭 𝐚𝐥𝐥 𝐭𝐞𝐫𝐦𝐬 𝐚𝐫𝐞 𝐞𝐪𝐮𝐚𝐥.

Why? Because exclusions and limiting terms are intended to qualify or 𝑐𝑎𝑟𝑣𝑒 𝑏𝑎𝑐𝑘 an underwriter’s initial promises of cover.

So how can you truly understand what an exclusion means – what it’s carving away – if you don’t first stop and appreciate what’s been promised in the first place?

👉 You can’t. It’s putting the proverbial horse before the cart.

𝐏𝐫𝐚𝐜𝐭𝐢𝐜𝐚𝐥 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲𝐬 𝐟𝐨𝐫 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐏𝐫𝐨𝐟𝐞𝐬𝐬𝐢𝐨𝐧𝐚𝐥𝐬

✅ Never start (or stop) a policy analysis by considering just one term. Looking at one clause in isolation will never give you the full picture.

✅ Always start with the insuring clauses. Limiting terms like deductibles, some endorsements, exclusions and conditions typically only make sense in their context.

✅ In the face of a claim, exclusions only really matter if cover is triggered. That’s why claims analysis must always begin with the insuring provisions.

✅ Underwriters can (of course!) limit cover – but only if their limiting terms are objectively consistent and work harmoniously with other terms in that policy.

✅ Policy arguments based solely on the language of one isolated clause might be a starting point, but there’s more work to do. Courts will always look at the policy contract as a whole, and so should you.

𝐀 𝐂𝐚𝐬𝐞 𝐢𝐧 𝐏𝐨𝐢𝐧𝐭

A recent case shows just how costly it can be to read policy terms in isolation.

At trial, the judge focused solely on the terms of a deductible clause and concluded that only a single $10K deductible applied to a multi-million-dollar property claim involving 120 homes damaged by a hailstorm.

But on appeal – when the policy was reviewed (and the deductible interpreted in the context of the policy’s insuring promises) – the Court found the correct deductible was actually $𝟣.𝟤 𝑚𝑖𝑙𝑙𝑖𝑜𝑛.

That’s a huge difference, and an expensive reminder of why exclusions and limiting terms can’t be read in a vacuum.

𝐅𝐢𝐧𝐚𝐥 𝐓𝐡𝐨𝐮𝐠𝐡𝐭

Insurance policies aren’t designed to be read term by term in isolation. They are sophisticated contracts that must be interpreted using legal principles, including the need to consider 𝑐𝑜𝑛𝑡𝑒𝑥𝑡.

Insuring clauses are ALWAYS your starting point. Only then can exclusions and limiting terms be seen for what they really are: qualifications on an already defined promise of cover.

📘 If you’d like more practical tips, go to the homepage and download our free Tip Sheet: 𝟣𝟤 𝑇ℎ𝑖𝑛𝑔𝑠 𝑡𝑜 𝐶𝑜𝑛𝑠𝑖𝑑𝑒𝑟 𝑊ℎ𝑒𝑛 𝐴𝑝𝑝𝑙𝑦𝑖𝑛𝑔 𝑃𝑜𝑙𝑖𝑐𝑦 𝑇𝑒𝑟𝑚𝑠.