Five years ago, Mr Lamb (the insured) entered into a contract by which he insured both his house and contents with ABC Insurance Ltd (ABN 11 2jj 333 xxx) (the insurer). At that time his house, which was located in an exclusive Melbourne suburb, was valued at $6.5 million. After his children grew up and moved away, he realised the house was too big for his wife and him to live in alone. Thus, two years ago, he set up a company, Glamourous Getaways Pty Ltd in which he rented out his home for weddings, events and to movie production companies.

Insurance Contract entered into by Wally Lamb and ABC Insurance Ltd

Clause 19

We Cover

Loss or damage caused by thieves or burglars.

We Do Not Cover

Loss or damage:

(a) caused by you or someone who lives at the insured address;

(b) caused by someone who entered the insured address with:

(i) your consent;

(ii) the consent of someone who had your authority to allow them access to the insured address.

(iii) caused by thieves or burglars entering your insured address from common property, shared clothes line areas, garages, storage areas or a car parking lot at the insured address without signs of forced entry.

Part (a)

Last week, the property, and all its contents, was completely razed to the ground by fire. Mr Lamb immediately notified the police who handed the case to their arson squad for investigation. Next, Mr Lamb contacted the insurer and submitted a claim for $6.5 million.

The insurer has denied Mr Lambs claim on the basis that he no longer had an insurable interest in the house and its contents.

Advise Mr Lamb if he is able to make a claim on the insurance policy.

[10 marks]

Part (b)

Assume that instead of fire damage, the contents of the house were stolen by a burglar on 2 November. Joshua Ryan and Melinda Lim had booked the house for their wedding reception from 1 to 3 November 2021 and were in occupation at the time of the theft.

Mr Lamb made a police report and submitted a claim on the insurance policy. The police viewed CCTV from Mr Lambs house, and from the homes of neighbours, and determined that the back door of the house was not secured by Mr Ryan and Ms Lim after the last guest had left for the evening. The thief was able to enter the house without having to force open the lock.

The insurance company is now refusing to pay out on the policy, in reliance on clause 19 in the insurance contract.

Advise Mr Lamb if this clause in the insurance contract is binding.

[10 marks]

If you have to answer only one, answer b if not answer both