Property insurance: measure of indemnity and utmost good faith

The decision of Gendall J in Young v Tower Insurance Ltd [2016] NZHC 2956 marks a significant departure in the common law. Although the case is primarily about the measure of indemnity under a property policy, the New Zealand High Court has now specifically adopted an implied term of utmost good faith, one aspect of which is the obligation of an insurer to handle a claim properly and without delay.

Leaving aside the wider ramifications for the development of the law, the case effectively introduces into New Zealand law the late payment provisions of section 13A of the English Insurance Act 2015.