Reference no: EM133938228

Question

Nur is in the process of buying a new home near a coal-fired power station. It is in an area that has, in the past, been affected by black dust. Because of this history the bank was only prepared to lend him a modest sum of money and the rest he paid from his savings and with financial help from his parents. The bank also strongly recommended, in addition to having mortgage insurance, that he arrange comprehensive insurance to cover him against 'coal dust damage'. Nur immediately got in touch with his Insurance Company (General Insurance Company Inc.). When taking out his policy, Nur disclosed to the insurance company that his land had previously been affected by a coal dust and was told that the company was aware of that fact and that his policy would include cover for property damage 'caused by coal dust'. Within 12 months Nur's house is damaged by a power outage said to be caused by possums running along nearby power lines. General Insurance has rejected Nur's insurance claim on the basis that the damage to his property was not "directly caused" by the coal dust. Advise Nur on the key rules of insurance law that relate to this case. Can General Insurance deny Nur's claim? Use relevant insurance law cases to justify your answer. If General Insurance won this case, is there another possible cause of action for Nur? Briefly explain your rationale. ( Answer according to IRACC model )