Federal Court finds Auto & General Insurance Company did not include an unfair contract term in its insurance contracts

The Federal Court has today found that a term requiring policy holders to notify Auto & General Insurance Company Limited (Auto & General) of any changes to their home and contents is not unfair under the ASIC Act.

ASIC alleged that the term was unfair as ASIC considered it:

• imposes an obligation on customers to notify Auto & General if ‘anything’ changes about their home or contents (with a non-exhaustive list of examples), which imposes an unclear obligation on the customer 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 customer does not meet the notification obligation than is available under the Insurance Contracts Act.
• could mislead or confuse the customer as to their true obligations and rights under the contract.

ASIC Deputy Chair Sarah Court said ‘ASIC pursued this case as part of its consumer protection focus on unfair contract terms in insurance contracts. ASIC believes that contract terms, especially those in standard form contracts, should be proportionate, transparent and clear so that consumers can readily understand their rights and responsibilities under the contract.’

ASIC is considering the judgment.