SUPREME COURT UPHOLDS EXCLUSION CLAUSE

Earlier this year in De Vito v Commercial Union Assurance Co the Full Court of the Supreme Court decided an appeal on the question of whether or not an insurance company was entitled to rely upon an exclusion clause which denied indemnity if the driver of the insured vehicle was under 25 years of age or had not held a heavy vehicles licence for 2 years.

The Court held that the exclusion clause should be read so as to allow the insurance company to deny indemnity even if the owner of the business and the holder of the insurance policy, Mr De Vito, did not authorise or have knowledge of the fact that an inexperienced driver was in control of the vehicle.

The Court recognised that it is still the case that ambiguities in insurance contracts will be construed in favour of the insured but decided that even though the insurance policy seemed to allow some strange results when read literally, those results were not such as to justify the policy being given other than its literal meaning.