Federal Court Upholds Insurer's Policy Update Clause

1

In a conclusive judgment delivered by Justice Ian Jackman, the contentious clause that requires customers to update the insurer on alterations to their insured properties was found to be sound and justifiable. Echoing the insurer’s stance, Justice Jackman emphasized that such terms empower the insurer to assess the risks it is prepared to assume strategically.

The courtroom reverberated with Justice Jackman's words as he underscored the insurer’s right to revoke coverage or eschew claim payments tied to risks it would customarily decline. This process, he affirmed, is fundamental for Auto & General to stay within its risk appetite contours.

While considering the outcome of the court decision, ASIC showed deference, stating it was digesting the implications of Justice Jackman’s ruling. ASIC had initiated this case based on policies sold within a bustling year starting from April 5, 2021, to May 4, 2022, wherein Auto & General had recorded approximately 1.377 million contracts, with renewals in the mix. At the core of ASIC's argument was the presumed ambiguity wrapped in the insurer's notification clauses that demand policyholders to flag“any changes” during the insurance term.

ASIC’s Deputy Chair, Sarah Court, previously pinpointed that customers are trapped in a vortex of impracticality trying to adhere to such sweeping demands. However, Justice Jackman’s deliberation removed any clouds of doubt by elucidating that the clause wasn't to be interpreted in the extreme. He clarified that no rational individual would burden the insurer with trivialities such as daily household fluctuations.

Rather, Justice Jackman swayed towards the conviction that policyholders were only bound to report substantive changes, thereby underpinning Auto & General’s interpretation of the clause as fair and legally tenable.

Responding to their courtroom victory, Auto & General stressed its commitment to work synergistically with ASIC, underscoring their respect for stringent regulations designed to shelter consumers. 

Published:Tuesday, 26th Mar 2024
Source: Paige Estritori

Share this news item:

Insurance News

Clear

ASIC Challenges Federal Court's 'Fair Term' Ruling 09 Jul 2025: Paige Estritori The Australian Securities and Investments Commission (ASIC) is appealing a Federal Court decision regarding the wording of a 'pre-existing condition' clause in certain HCF Life insurance products. The court previously determined that while the wording had the potential to mislead consumers, it did not constitute an unfair contract term under the current laws set out in the ASIC Act 2001. - read more

ICA Advocates for Strata Law Reform in the ACT to Enhance Building Management 08 Jul 2025: Paige Estritori The Insurance Council of Australia (ICA) is urging the Australian Capital Territory (ACT) to adopt strata transparency regulations, aiming to enhance oversight of building repairs and maintenance by owners’ committees. This call was made during a parliamentary inquiry, where the ICA pushed for measures akin to recent legislative changes in New South Wales. - read more

Tasmanian Government Insurance Proposal Faces Industry Backlash 07 Jul 2025: Paige Estritori The Tasmanian government's recent proposal to establish a state-run insurance entity has drawn significant criticism from key players in the insurance industry. The plan, spearheaded by Premier Jeremy Rockliff, aims to expand the Motor Accidents Insurance Board into a broader service named TasInsure, offering products including home and contents insurance, small business coverage, and more. The RACT, a major player in Tasmania's insurance sector, expressed considerable concern, labelling the initiative as a simplistic answer to complex problems. - read more

Asbestos Scare Leaves Hospitality Business Uninsured 04 Jul 2025: Paige Estritori The discovery of asbestos-contaminated mulch in a Sydney park led to the cancellation of a festival, resulting in significant financial losses for a hospitality business. Despite these setbacks, the company's claim for coverage under its business interruption (BI) policy was rejected. - read more

Landmark NSW Decision: Dog Walking Costs Covered in Car Crash Injury Claims 03 Jul 2025: Paige Estritori In a groundbreaking decision by the NSW Personal Injury Commission, an insurer has been directed to cover the costs of dog walking services for a car crash victim. The commission ruled that these services classify as domestic assistance under the state’s Motor Accident Injuries Act. This case could pave the way for broader interpretations of 'attendant care services' for claimants. - read more