Stubbs v NRMA Insurance Limited

In *Stubbs v NRMA Insurance Limited*, the High Court of Australia considered an appeal from the Supreme Court of New South Wales concerning the interpretation of an insurance policy. The dispute arose from a claim made by the appellant, Ms Stubbs, under a comprehensive motor vehicle insurance policy issued by the respondent, NRMA Insurance Limited, following damage to her vehicle.

The central legal issue before the High Court was whether the damage to Ms Stubbs' vehicle, which occurred when it was being driven by a person who was not named on the policy and who did not have a licence, was covered by the policy. Specifically, the court had to determine if the policy's exclusion clause, which purported to exclude cover where the vehicle was driven by an unlicensed driver, was effective in the circumstances.

The High Court held that the exclusion clause was not effective to deny cover. Their Honours reasoned that the clause, as written, was ambiguous and could be interpreted in a way that did not exclude cover for the damage that had occurred. They applied the principle that where an insurance policy contains an ambiguity, it should be construed against the insurer and in favour of the insured. The court found that the exclusion clause did not clearly and unambiguously exclude cover in the situation where the driver was unlicensed but otherwise permitted to drive the vehicle.

The High Court allowed the appeal and ordered that the judgment of the Supreme Court of New South Wales be set aside. The court remitted the matter to the Supreme Court to determine the extent of the appellant's entitlement to indemnity under the policy.