ASIC Challenges Court Ruling on Auto & General's Unfair Contract Term

ASIC has appealed the Federal Court's decision to dismiss ASIC's proceedings against Auto & General Insurance Company Limited (Auto & General) regarding an alleged unfair contract term under the ASIC Act.

ASIC alleged that a term in Auto & General house and contents insurance policies:

• required policyholders to notify Auto & General if 'anything' changes about their home and contents; and
• stated that if policyholders did not provide the notifications, then Auto & General may reduce or refuse to pay claims, or may cancel or not offer to renew their contracts,

ASIC alleged that the term is an unfair contract term under the ASIC Act.

The Federal Court disagreed and dismissed ASIC's proceeding on 22 March 2024.

ASIC has appealed the decision of the Federal Court. ASIC remains concerned that the term:

• imposes an unclear obligation on policyholders regarding what they need to disclose to Auto & General;
• suggests that Auto & General has a broader right to refuse claims or reduce the amount payable under claims if the policyholder does not meet the notification obligation than is otherwise available to Auto & General under the Insurance Contracts Act; and
• could mislead or confuse the policyholder as to their true obligations and rights under the contract.

The appeal will be heard by the Full Federal Court on a date to be determined.