Commonwealth Consolidated Acts

INSURANCE CONTRACTS ACT 1984 - SECT 41

             (1)  This section applies where it would constitute a breach of a contract of liability insurance if, without the consent of the insurer, the insured were to:

                     (a)  settle or compromise a claim made against the insured; or

                     (b)  make an admission or payment in respect of such a claim.

             (2)  An insured who has made a claim under a contract of liability insurance may at any time, by notice in writing given to the insurer, require the insurer to inform the insured in writing:

                     (a)  whether the insurer admits that the contract applies to the claim; and

                     (b)  if the insurer so admits, whether the insurer proposes to conduct, on behalf of the insured, the negotiations and any legal proceedings in respect of the claim made against the insured.

             (3)  Where the insurer does not, within a reasonable time after the notice was given, inform the insured that the insurer admits that the contract of liability insurance applies to the claim and that the insurer proposes to conduct, on behalf of the insured, the negotiations and any legal proceedings in respect of the claim made against the insured, the insurer may not refuse payment of the claim, and the amount payable in respect of the claim is not reduced, by reason only that the insured breached the contract as mentioned in subsection (1).