Civil Aviation (Carriers’ Liability) Regulations 2019

The central organising concept is the acceptable contract of insurance. As defined in the Act (section 41B) and referenced throughout the regulations, this means a contract that meets the requirements set by the regulations. The regulations specify two key requirements in section 8: the insurer must be either an Australian authorised insurer under the Insurance Act 1973 or a foreign insurer that CASA considers subject to similar regulatory standards; and the contract must provide cover of at least 480,000 SDRs for passenger injury or death. The second concept is the SDR or Special Drawing Right, defined in section 5 by reference to the Act. This is an international unit of account set by the International Monetary Fund. The regulations use SDRs as an alternative currency reference for liability limits and insurance requirements: 480,000 SDRs for passenger liability and 480,000 SDRs for required insurance cover. This creates a fluctuating domestic dollar equivalent that changes with exchange rates, meaning the actual dollar cap and insurance minimum can vary over time without amending the regulations. The third key concept is the terminating event under section 12(6): an act of the carrier that would, apart from section 13(4), cause the contract to cease before its end date. This is significant because it captures unilateral carrier behaviour (such as non-disclosure of material facts, breach of warranty, or failure to pay premium) that might otherwise allow the insurer to terminate cover early. The concept triggers the insurer’s notification obligation and, critically, the automatic continuation of cover under section 13 if the insurer fails to notify. Next, permitted exclusion clauses under section 9 allow insurers to limit their exposure without making the contract unacceptable. The clauses listed are standard London market clauses for catastrophic risks: radioactive contamination, nuclear risks, noise and pollution, and war/hijacking. They also allow exclusion for employee travel and for aircraft not notified to the insurer. This preserves market standard underwriting practices while still requiring cover for core passenger liability. Finally, notice periods and deeming provisions under Part 4 create a system where CASA can demand proof of insurance within 14 days, or within three days if a risk has been flagged by the insurer or CASA holds a reasonable belief the cover has failed. The short three-day period for flagged situations imposes urgency and shifts the burden onto the carrier to respond quickly.

The regulations directly affect three classes of participants. First, domestic air carriers operating Australian flights are directly bound by the liability limits in sections 6 and 7. Any carrier that carries passengers for reward on an aircraft registered in Australia or engaged in Australian domestic carriage must comply. These limits cap the carrier’s exposure to passenger claims for injury or death at $925,000 (or 480,000 SDRs) and baggage claims at $3,000 (or $300 for certain items). The carrier cannot contract out of these limits in its standard terms unless it voluntarily accepts higher liability. This means carriers face reduced flexibility to differentiate their product through higher voluntary assumed liability. Second, insurers are directly affected by Parts 3 and 4. Insurers must ensure policies meet the threshold requirements: the insurer must be Australian-authorised or CASA-approved foreign, and cover must be at least 480,000 SDRs. Insurers also bear the notification obligations under section 12: they must notify CASA before any modification that would make the contract unacceptable, before any cancellation, within three business days of non-renewal, and within three business days of becoming aware of a terminating event. Failure to notify triggers automatic extension of cover under section 13, potentially for up to three months without premium. This creates a significant liability risk for insurers: if they fail to notify, they remain on risk even if the contract says otherwise. Third, CASA (the Civil Aviation Safety Authority) gains auditing powers under Part 4. CASA can issue notices requiring carriers to produce evidence of insurance within 14 days (or three days in urgent cases) under section 10. CASA also receives notifications from insurers and can act on that information. The three-day notice period under section 10(2) and (3) applies when CASA has already received an insurer notice or reasonably believes cover may have failed. This gives CASA a mechanism to rapidly check compliance. Fourth, passengers are affected in that their recovery for injury or death is capped at $925,000 or 480,000 SDRs, and for lost or damaged baggage at $3,000 or $300, unless the carrier voluntarily assumes higher liability. The limits are absolute under the Act and regulations, not dependent on carrier fault. Passengers therefore have a ceiling on damages regardless of actual loss, which reduces the downside risk for carriers but also reduces the potential compensation for passengers with high-value claims. Fifth, employees of carriers who travel in the course of duties are indirectly affected because the regulations permit insurers to exclude them from cover under section 9(4). This means the carrier remains liable but cannot rely on the insurance policy to indemnify for those claims, potentially leaving the carrier to self-insure. Finally, foreign aviation insurers are affected if they seek to provide acceptable contracts: they must satisfy CASA that their home regulation is similar to the Insurance Act 1973 standards. This imposes a compliance hurdle that may increase costs or reduce the pool of eligible insurers.

The regulations impose several specific duties and create a few rights. The primary duty under section 8(1) is on the carrier to maintain an acceptable contract of insurance with an eligible insurer covering at least 480,000 SDRs for passenger injury or death. This is a prescribed requirement under section 41C(2)(b) of the Act, meaning that failure to maintain such cover exposes the carrier to enforcement action under the Act (including potential suspension of operations). The carrier also must be able to produce evidence of that insurance on demand to CASA within 14 days (section 10(1)) or within three days if CASA has received notice from the insurer or reasonably believes cover is ineffective (section 10(2) and (3)). The form of evidence is prescribed in section 11: the carrier can provide an insurer’s certificate, the contract itself, a premium receipt, or another form specified in the CASA notice. This gives the carrier some flexibility but also imposes a record-keeping and response burden. The primary duty on the insurer is notification under section 12. This is a duty owed to CASA, not to the carrier. The insurer must notify CASA in writing of any modification that would make the contract unacceptable, any cancellation, and any non-renewal. For modifications and cancellations, the notice must be given no later than the third business day before the event, unless the insurer had no reasonable expectation before then, in which case notice must be given by the end of the first business day after the event (section 12(3)). For non-renewals, notice must be given within three business days after expiry (section 12(4)). For terminating events (carrier acts that would end cover), notice must be given within three business days after the insurer becomes aware or ought reasonably to have become aware (section 12(5)). These are short and unforgiving deadlines. The consequence of failing to notify is severe: under section 13, the contract remains in force despite its own terms until the earliest of (a) the carrier obtains replacement acceptable cover, (b) three business days after CASA receives the late notice, or (c) three months after the event if no notice is ever given. This means the insurer remains on risk for up to three months after the event that would have ended cover, potentially without the right to claim additional premium. The insurer also has the right, under section 9, to include standard exclusion clauses and exclusions for employees and unnotified aircraft. Those exclusions mean the policy need not cover those risks, so the insurer has a right to limit its exposure. The carrier has the right to rely on the fact that if the insurer fails to notify, cover continues automatically under section 13. This right is valuable for the carrier because it protects against gaps in cover caused by insurer administrative failures. However, this right is contingent on the carrier not having caused the terminating event in a way that might constitute fraud or breach of the policy; the regulations do not provide exceptions for carrier misconduct. CASA has the right to issue notices, set evidence periods, and receive insurer notifications. CASA also has the right (under the Act, not these regulations) to enforce compliance. The regulations do not create any private right of action for passengers against carriers or insurers. Enforcement is by CASA under the Act, not by individuals.

The regulations themselves do not set monetary penalties. Any enforcement consequences arise under the parent Act, the Civil Aviation (Carriers’ Liability) Act 1959. However, the regulations create the substantive standards that trigger enforcement: if a carrier operates without an acceptable contract of insurance (contrary to section 41C of the Act, which the regulations support), CASA may take action under the Act. Similarly, if a carrier fails to produce evidence of insurance within the prescribed period, that is a basis for CASA enforcement. The regulations do specify one civil effect that operates as a functional penalty on insurers: the automatic extension of cover under section 13. If an insurer fails to give notice under section 12(2), (4), or (5), the contract remains in force despite any cancellation, non-renewal, or terminating event. The extension lasts until the earliest of replacement cover, three business days after CASA receives the late notice, or three months after the event. This is a powerful default mechanism. It puts the insurer in a position where it must honour claims during the extension period even though the policy terms would have ended the cover. The insurer cannot charge for that period unless the contract itself provides for a grace period (which the regulations do not require). This creates a strong incentive for insurers to maintain good notification systems. However, the regulations provide no penalty against the carrier for failing to maintain insurance; that is handled under the Act. The regulations also do not create any criminal offences or infringement notices. For insurers that fail to meet the authorisation requirements in section 8(1) (i.e., they are not an Australian insurer or CASA-approved foreign insurer), the consequence is that the contract is not an acceptable contract of insurance. The carrier is then in breach of the Act, not the insurer. The insurer would face no direct penalty under these regulations (though it might face regulatory consequences under the Insurance Act 1973 or foreign law). The regulations also lack any provision for CASA to impose administrative sanctions such as directions or suspension. Enforcement remains with the Act’s penalty provisions, which the source does not detail. The auditing provisions in Part 4 give CASA information-gathering powers but do not specify consequences for a carrier that provides false evidence. That would likely fall under general criminal law (false statements). The three business day notice periods for insurers are tight; missing them by even a few hours due to public holidays or time zone differences could trigger the extension. There is no provision for extension or waiver of the time limits by CASA. This means insurers bear the risk of any delay beyond their control (e.g., postal or electronic delivery delays). The practical enforcement of the notification duties depends on CASA cross-checking insurer notices with actual cover status. If CASA is underresourced, this self-policing by insurers may be light. The regulations assign no monitoring duty to CASA; they simply provide information receipt.

These regulations sit under the Civil Aviation (Carriers’ Liability) Act 1959 and derive their authority from it (section 3). They flesh out the specific dollar and SDR figures that the Act leaves open to prescription. The Act itself creates the framework of carrier liability and mandatory insurance; the regulations set the numbers. The regulations also interact with the Civil Aviation (Carriers’ Liability) Regulations 1991, which they repeal (Schedule 1). However, Part 5 provides a transitional overlap: contracts of insurance entered into before 1 October 2019 continue to be governed by the old 1991 regulations (specifically regulations 10 and 11 on notification) despite the repeal. This creates two parallel regimes: pre-2019 contracts under the old rules (with different timeframes and possibly different evidence requirements) and post-2019 contracts under these regulations. Practitioners must check the contract date to determine which set of rules applies. The regulations also interact with the Insurance Act 1973. Section 8(1) prescribes that an acceptable contract of insurance must be with an insurer authorised under section 12 of the Insurance Act 1973, unless a foreign insurer satisfies CASA. This directly incorporates Australian prudential regulation into the aviation liability regime. If the Insurance Act 1973 is amended, the pool of authorised insurers may change, affecting the availability of acceptable cover. The regulations also interact with international conventions indirectly. The use of SDRs as a reference unit aligns the domestic regime with the Montreal Convention (for international carriage), even though these regulations apply only to domestic carriage. The amounts 480,000 SDRs for passenger liability and 480,000 SDRs as minimum insurance cover mirror the Montreal Convention limits, creating consistency between domestic and international liability caps as at the time of drafting. However, the domestic dollar amount in section 6(1) ($925,000) is a fixed number, not indexed to SDR fluctuations. This means that if the AUD/SDR exchange rate changes significantly, the dollar cap could diverge from the SDR alternative, creating two different caps that may be used at different times by different carriers or in different proceedings. For baggage, the amounts are expressed only in dollars ($3,000 and $300), not in SDRs, so no exchange rate issue arises for those limits. The regulations also interact with state and territory workers compensation laws through section 9(4), which permits insurers to exclude employee coverage. This means that a carrier’s employee travelling in the course of duties is not covered by the mandatory aviation insurance policy. That employee would instead need to rely on state workers compensation, which may have different coverage limits, exclusions, and procedural requirements. The exclusion is permissive, not mandatory, so carriers and insurers could still include employees in the policy by agreement, but the regulations do not require it. Furthermore, the regulations do not interact with the Competition and Consumer Act 2010 or Australian Consumer Law directly, but liability limits under section 6 may affect a passenger’s ability to claim damages for personal injury beyond the cap, which could reduce the quantum that a court could award regardless of the carrier’s fault. The regulations also do not address concurrent liability with the Civil Aviation Act 1988 or CASA safety regulations; those are separate regimes.

These regulations were made on 5 September 2019 and commenced on 1 October 2019, as stated in section 2 and the commencement table. They repealed and replaced the Civil Aviation (Carriers’ Liability) Regulations 1991 in their entirety (Schedule 1). The source text provides no subsequent amendments. The regulations have not been amended since their commencement date, according to the text provided. The note in section 2 clarifies that the commencement table relates only to provisions as originally made and will not be amended to reflect later changes. The regulations themselves contain no sunset clause or review date. The liability limits in sections 6 and 7 and the SDR figures in sections 6(2) and 8(2) are expressed as fixed numbers and fixed SDR amounts, not as indexed or adjustable figures. This means that if inflation or exchange rate movements erode their real value, amendment by further legislative instrument would be needed to update them. The standard exclusion clauses in section 9 are locked to the versions as accessible on the IUA London website on 1 October 2019. If the IUA later updates those clauses (e.g., AVN 48C superseding 48B), the regulations do not automatically incorporate the new version. Carriers and insurers would need an amendment to the regulations or would need to use a clause with similar effect under section 9(2)(b). The transitional provisions in Part 5 ensure that the 1991 regulations continue in force for contracts entered into before 1 October 2019, even though the 1991 regulations are technically repealed. This is a standard savings provision. The 1991 regulations had regulations 10 and 11 dealing with notice of cancellation and non-renewal. Those provisions continue to apply to pre-2019 contracts. The source does not specify the exact content of those old regulations, but users should locate the 1991 version if they are dealing with older contracts. There is no amendment history in the source beyond the initial enactment and repeal. Users should check the Federal Register of Legislation for any subsequent amendments not captured here.

The source text does not mention any litigation. No cases are cited and no interpretation disputes are referenced. However, certain provisions of these regulations are likely to be litigable in future. The liability limits in section 6 may give rise to disputes about whether a particular passenger claim exceeds the cap, particularly if the carrier voluntarily offered higher limits in its contract of carriage. The SDR conversion rate calculation could be disputed if a carrier uses a different exchange rate (the regulations specify no conversion method). The definition of “terminating event” in section 12(6) may be litigated if a carrier argues that an insurer’s characterisation of an act as a terminating event was unreasonable, leading to the insurer’s alleged failure to notify and the automatic extension of cover under section 13. The phrase “an act of the carrier” is broad and untested. Does it include a carrier’s failure to pay premium? A notification of change of operations? A breach of a policy warranty? The regulations do not limit the types of acts. The reasonableness standard in section 12(5) (“ought reasonably to have become aware”) may also be contested: when is an insurer deemed aware of a terminating event? If the carrier notifies a claims handler but not the compliance department, does that trigger the three business day clock? Section 13’s automatic extension may lead to disputes about CASA’s receipt of notice: what proof constitutes delivery? The regulations do not specify a method of notice (email, physical mail, fax). If CASA receives a notice but it is misaddressed, is it “received”? Section 10(2) states the period may be “set out in a notice given to the carrier”, which is drafted permissively rather than mandatory. The word “may” in section 10(2) gives CASA discretion to set a three-day period, not an obligation. This could be challenged if CASA sets an unreasonably short period. The exclusion clauses in section 9 reference specific IUA clauses as at 1 October 2019. If a court later holds that one of those clauses is void or unenforceable (e.g., under the Insurance Contracts Act 1984), there is no mechanism in the regulations to substitute a replacement clause. The regulations also do not address the possibility that an insurer might be able to avoid the policy due to the carrier’s non-disclosure of material facts. The Insurance Contracts Act 1984 could interact, but the regulations do not modify it. The gap between the state workers compensation regime and the aviation liability scheme may produce litigation about whether a carrier is vicariously liable for employee injuries if the employee was not covered by the aviation policy. Litigation may also arise regarding the definition of “baggage” in section 7: the regulations do not define it, so that would be determined by the Act or by common law interpretation. Finally, the interaction between these regulations and the carrier’s general law liability beyond the caps may be litigated if a passenger argues that the cap does not apply to a particular type of loss (e.g., punitive damages). The Act would govern that, not these regulations.

The regulations contain several traps for the unwary. First, the three-business-day notice periods under section 12 are extremely short. An insurer that operates in a different time zone or uses slower communication methods can easily miss them. Missing the deadline triggers automatic extension under section 13, which could add up to three months of unremunerated risk. The insurer cannot contract out of this effect; section 13 says “despite anything in the contract of insurance.” Second, the terminating event definition in section 12(6) is any act of the carrier that would have the result of the contract ceasing before its term. This is very broad. It could include the carrier’s failure to pay a premium instalment, the carrier’s breach of an operational warranty, or the carrier’s de-registration of an aircraft. The insurer must notify CASA of such an event within three business days of becoming aware or being deemed aware. If it fails, cover continues. Third, the static reference to IUA clauses as at 1 October 2019 under section 9(3) means that if the IUA later revises AVN 48B (the war and hijacking exclusion) to add or remove perils, the new version is not automatically incorporated. Carriers and insurers must use the old version or a clause of “similar effect” (section 9(2)(b)). The phrase “similar effect” creates uncertainty: is a clause that is broader than AVN 48B similar? Is a clause that is narrower similar? If a dispute arises, a court would need to interpret this. Fourth, the SDR conversion risk: the passenger liability cap is expressed both as $925,000 and as 480,000 SDRs. The regulations do not specify which governs or how conversion is to be done (date of loss, date of judgment, date of policy inception). If the AUD weakens against the SDR, 480,000 SDRs could exceed $925,000, meaning the SDR cap is higher. A carrier that relies on the dollar cap might be exposed if a passenger or regulator argues the SDR cap applies. The Act defines SDR but not conversion. Fifth, the insurance evidence rules under section 11 allow a carrier to provide a “written receipt for payment of a premium” as evidence. This is lower threshold than a full policy schedule. A receipt alone may not detail exclusions or conditions; a carrier might rely on it thinking it proves adequate cover, but the policy might contain a permitted exclusion that leaves the carrier without cover for certain claims. Sixth, the grandfathering for pre-1 October 2019 contracts under section 16 means that a carrier with a long-standing insurance arrangement might still be subject to the old 1991 regulations for that contract. If a new contract is entered into on or after 1 October 2019 (even with the same insurer and same terms), the new regulations apply. Any amendment to a pre-2019 contract could arguably create a new contract, making it subject to the new rules. The regulations do not define “entered into” in this context. Seventh, the employee exclusion in section 9(4) is permitted but not mandatory. A carrier that does not check its policy may discover only upon a claim that the insurer excluded employees. The carrier cannot rely on the mandatory insurance to cover that exposure. Eighth, the CASA three-day notice under section 10(2) and (3) gives the carrier only three days to produce evidence. If the carrier’s insurer is slow to provide documentation, the carrier may fail to meet the deadline. The regulations do not excuse non-compliance due to insurer delay. Ninth, the failure by CASA to receive insurer notice: under section 13(2)(b), if the insurer gives notice after the event, the contract remains in force only until three business days after CASA receives the notice. But if the notice is lost in transit or misaddressed, CASA has not received it, and the contract could remain in force for up to three months. The insurer must prove delivery. Tenth, the absence of any provision for waiver or extension by CASA for any of the time periods means that strict liability applies to deadlines. A carrier that misses the 14-day or three-day evidence deadline cannot seek an extension from CASA under these regulations (though the Act may permit it).

For carriers, the primary obligation under the Act as supported by these regulations is to maintain an acceptable contract of insurance that meets the standards of section 8 and covers at least 480,000 SDRs for passenger injury or death. Carriers should verify the insurer’s authorisation: either ask for a copy of the insurer’s licence or authorisation under section 12 of the Insurance Act 1973, or if the insurer is a foreign entity, obtain written confirmation from CASA that it satisfies similar standards. The carrier should also confirm that the policy does not include any exclusion beyond those permitted in section 9, because if the policy excludes something not listed in section 9 (e.g., liability arising from mechanical failure), the contract may not be acceptable. Carriers should keep a copy of the policy, a certificate of insurance, and premium receipts on hand to satisfy a CASA notice under section 11 within 14 days, or within three days if CASA flags a concern. Carriers should designate a person responsible for receiving CASA notices and for responding within the timeframes. If the carrier operates multiple aircraft, section 5 of the Act may require separate notification per aircraft; the regulations do not override that. Carriers should also review the policy to determine if employees are excluded under section 9(4). If employees travel in the course of duties, the carrier may want to either negotiate employee cover separately or self-insure for that risk. For insurers, compliance is more detailed. The insurer must maintain authorisation under the Insurance Act 1973 or satisfy CASA of its foreign equivalent. The insurer must also ensure that the policy covers at least 480,000 SDRs for passenger injury or death. The insurer must establish internal systems to monitor for any events that trigger a notification duty: modifications, cancellations, non-renewals, and terminating events (carrier acts). For each event, the insurer must send a written notice to CASA. For modifications and cancellations, the notice must generally go out at least three business days before the event. That means the insurer must identify the event early enough to prepare and send the notice. For non-renewals, notice is due within three business days after expiry. For terminating events, notice is due within three business days after the insurer becomes aware or ought reasonably to have become aware. The insurer should keep a log of all such events and the dates of notification to CASA, with proof of delivery (e.g., email read receipt, postal tracking, or fax confirmation). If the insurer uses permitted exclusion clauses from section 9, it must ensure they match the IUA versions as at 1 October 2019 or are of “similar effect.” If using a “similar effect” clause, the insurer should document the comparison in case CASA challenges it. The insurer should also ensure that any clause excluding liability for unnotified aircraft under section 9(5) is paired with a written notice to CASA identifying the types or specific aircraft covered; that notice is required for the exclusion to be valid. The insurer should have a process for receiving notifications from carriers about changes in aircraft registration or operations, because a carrier operation that involves an unnotified aircraft could trigger a coverage gap. For CASA, compliance means issuing notices under section 41JA of the Act with the correct periods (14 days general, three days if an insurer notice has been received or if CASA reasonably believes cover may have ceased). CASA must maintain records of insurer notifications under section 12 and match them against carrier responses. CASA also must decide whether foreign insurers satisfy the “similar” standard under section 8(1)(b)(ii), which requires internal guidelines. Finally, brokers and advisors should note the transitional provisions: pre-1 October 2019 contracts need the old 1991 regulations, and any new policy entered into after that date uses the new rules. They should advise carriers with ongoing existing contracts not to amend them after 1 October 2019 without considering the new notification and evidence obligations. A practical step is to have all carriers adopt new policies effective 1 October 2019 to create a clean transition. The automatic extension under section 13 should be explained to insurers as a serious financial risk that cannot be insured away (because it arises from the insurer’s own failure to notify). Insurers should consider including a clause in their own internal procedures to report any carrier act that could be a terminating event to a central compliance unit within 24 hours, to be safe.