Sam owned a car insured by AGT insurers. Both Sam and his wife were nominated drivers of the insured vehicle under the insurance policy. Whilst Sam was driving the insured vehicle with his wife as a passenger they were involved in a serious car accident. A resulting prosecution against Sam for the offence of driving whilst intoxicated was dismissed by amagistrate.After the accident, Sam made a claim against his insurance policy. However, AGT insurers reduced the claim to nil due to a breach of the duty of disclosure. In completing the insurance proposal form, Sam had indicated that he did not have any driving convictions or been charged in the past five years. However, Sam did havethree convictions in that period: one for not wearing a seatbelt and two for driving under the influence of alcohol. Sam claims that he made all the necessary disclosures and, to the extent it had not, AGT had waived its right to rely on non-compliance with the duty of disclosure in accordance with s21(3) of the Insurance Contracts Act 1984 (Cth). Sam thereby argues that AGT insurers have not acted in good faith in relation to the insurance contract and are in breach of contract.
You are required to answer the following two questions:
(a) Identify and explore the legal issues that arise from the above situation?
(b) In an essay response which is separate from your answer to (a) above, comprehensively discuss what term ‘indemnity' means in insurance law?