The case centred on a freight company whose truck was involved in an accident in March 2024, resulting in the spill of hazardous materials. The insurer, ATL Insurance Group, denied the claim, alleging that the company failed to disclose that it transported dangerous goods, which would have influenced the insurer's decision to provide coverage.
The insurance policy application, completed online through the company's broker, included a section for selecting the primary freight task. The company selected 'deliveries – wholesale (non-containerised)' and did not add a secondary task. The insurer argued that the company breached its duty of disclosure by not selecting the 'dangerous goods' option, especially since the company advertised itself as a specialist in transporting hazardous materials and the vehicle was licensed for such transport.
The freight company contended that at the time of the policy application, it was primarily delivering general freight, with dangerous goods comprising about 10% of its operations. They also noted that the online application did not specifically inquire about the transportation of dangerous goods.
AFCA found that the policy application process lacked clear guidance on disclosing incidental or minor transport of dangerous goods. The authority determined that the company's selection of 'deliveries – wholesale (non-containerised)' was reasonable under the circumstances and that the insurer failed to provide sufficient evidence that the company was primarily engaged in transporting hazardous materials at the time of the policy's inception.
Consequently, AFCA ruled that the insurer should cover the claim up to the policy limits, emphasizing the need for insurers to provide clear and specific questions during the application process to ensure accurate disclosures.
This ruling underscores the importance for both insurers and insured parties to have transparent and precise communication regarding the nature of goods transported. Transport companies should ensure they understand their disclosure obligations, and insurers must provide clear instructions to facilitate accurate reporting, thereby preventing disputes and ensuring appropriate coverage.
