New South Wales Consolidated Acts

MOTOR ACCIDENTS ACT 1988 - SECT 45

45 Duty of insurer to try to resolve claim etc

(1) It is the duty of an insurer to endeavour to resolve a claim, by settlement or otherwise, as expeditiously as possible.

(2) Once liability has been admitted (wholly or in part) or determined (wholly or in part) against the person against whom the claim is made, it is the duty of an insurer to make payments to or on behalf of the claimant in respect of:

(a) hospital, medical and pharmaceutical expenses, and

(b) rehabilitation expenses, subject to Part 4, and

(c) respite care in respect of a claimant who is seriously injured and in need of constant care over a long term,

as incurred.

(2A) The duty of an insurer under subsection (2) to make payments applies only to the extent to which those payments:

(a) are reasonable and necessary, and

(b) are properly verified, and

(c) relate to the injury caused by the fault of the owner or driver of the motor vehicle to which the third-party policy taken to have been issued by the insurer relates.

(3) It is a condition of a third-party insurer’s licence that the insurer must comply with this section.

(4) A payment made under this section to or on behalf of a claimant before the claimant obtains judgment for damages against the defendant is, to the extent of its amount, a defence to proceedings by the claimant against the defendant for damages.

Note: Section 45 places obligations on insurers to act as expeditiously as possible, and to make certain payments of an interim nature once liability has been admitted or determined. The obligations are consistent with the insurer’s obligations regarding the rehabilitation of the claimant under sections 37 and 38.
Failure to observe the obligations in individual cases exposes the insurer to an award of interest under section 73. Continual failure to observe the obligations places an insurer’s licence at risk (section 45 (3)).
In order to meet its obligations, the insurer must have sufficient information to enable it to properly investigate and assess the claim, and make an appropriate offer of settlement. This requires early notice of the claim under section 43, and the provision of full particulars of the claim under section 48.