The Australian Securities and Investments Commission (ASIC) has taken a significant step in the ongoing dispute regarding a contentious contract term employed by Auto & General Insurance Company Limited (Auto & General) in its home and contents insurance policies. ASIC’s move comes as a response to a Federal Court decision that upheld the disputed clause.
At the heart of ASIC’s challenge lies a specific provision within the insurance contracts, mandating policyholders to promptly inform the insurer about any alterations concerning their insured property. Furthermore, the clause stipulates that failure to adhere to this requirement could result in diminished claim payouts, denial of claims, or even potential policy termination.
The regulatory body contends that this particular term imposes ambiguous obligations on policyholders, potentially misleading them about their entitlements under the agreement.
Auto & General’s purportedly unfair contract term was initially brought to light by ASIC on April 4, 2023. However, the Federal Court’s ruling on March 22, 2024, dismissed ASIC’s claims of unfair contract terms under the ASIC Act.
In response to the court’s decision, ASIC has escalated the matter to the Full Federal Court, awaiting a scheduled hearing for its appeal.
ASIC remains steadfast in its apprehensions, asserting that the disputed term extends Auto & General’s authority to reject or diminish claim payments beyond the bounds set by the Insurance Contracts Act.
The controversial clause was incorporated into various product disclosure statements issued by Auto & General, spanning multiple brands such as Budget Direct and Qantas Home and Contents Insurance. Following the initiation of legal proceedings, Auto & General ceased the issuance of new policies under certain brands and revised their terms in May and September 2023 in an attempt to address the concerns raised by the regulator.
