The Act defines a consumer insurance contract as one obtained wholly or predominantly for the personal, domestic or household purposes of the insured, or for new business where the insurer gives written notice stating it is a consumer insurance contract, with a presumption in proceedings that it is a consumer contract unless the contrary is established (s 11AB). A relevant failure is a misrepresentation breaching the duty to take reasonable care not to make a misrepresentation in a consumer contract or a disclosure failure or misrepresentation in another contract, with life insured misrepresentations treated as relevant failures in specified cases (s 27AA). The duty of the utmost good faith requires each party to act with utmost good faith in respect of matters arising under or in relation to the contract, extending to third party beneficiaries after the contract is entered into (s 13(1)). The duty of disclosure requires an insured to disclose every matter known to the insured that is relevant to the insurer's decision or that a reasonable person in the circumstances could be expected to know is relevant, having regard to the nature and extent of the cover and the class of persons ordinarily applying, excluding matters that diminish the risk, are of common knowledge, the insurer knows or ought to know, or where compliance is waived, with unanswered or obviously incomplete or irrelevant proposal form answers deeming waiver (s 21). For consumer contracts the insured has a duty to take reasonable care not to make a misrepresentation before entry, determined by all relevant circumstances including contract type and target market, insurer explanatory material, clarity and specificity of questions and communication of importance, agent involvement, new or renewal status, and insured characteristics known or reasonably ought to have been known to the insurer, with failure to answer or obviously incomplete or irrelevant answers not constituting a misrepresentation and fraudulent misrepresentation breaching the duty (s 20B). A statement of existing state of affairs made by or attributable to the insured has effect as a representation, not a warranty (s 20C and s 24). A prescribed contract and prescribed event are defined by regulation, with regulations construed as insurer-proposed contract provisions (s 34 and s 36). Flood in prescribed contracts has the meaning defined by regulation, regardless of any different contractual meaning (s 37B). An interim contract of insurance is temporary cover intended to be replaced or superseded (s 11(2)). A contract of general insurance is one that is not a contract of life insurance (s 11(6)). A contract of liability insurance is a general insurance contract providing cover for the insured's liability for loss or damage to a non-insured person (s 11(7)). An instalment contract of general insurance is one where the premium is payable by seven or more instalments in a year (s 11(8)). A group life contract is a life insurance contract maintained for a superannuation or retirement scheme or other group life scheme with more than one life insured (s 11(1)). A third party beneficiary is a person not a party but specified or referred to as entitled to the benefit of the cover (s 11(1)). Entering into a contract includes extension, variation, renewal or reinstatement, with deeming rules for prior compliance with specified information requirements and limits on when requirements apply to variations (s 11(9) to (11)).

The Act affects insurers and insureds, including proposed insurers and proposed insureds (s 11(1)). It affects third party beneficiaries, who have rights to recover under general insurance contracts per the contract terms and are subject to the same obligations, with the insurer having the same defences (s 48). For life policies, third party beneficiaries have recovery rights, with money not forming part of the estate except in superannuation schemes subject to terms and law, and the same obligations apply without restricting party rights to surrender, borrow or vary (s 48A). It affects life insureds, with misrepresentations by a life insured treated as made by the insured (s 25) and notification requirements applying to life insureds (s 22). It affects RSA holders and applicants, with relevant failures treated as contracts with the RSA provider (s 32A). It affects group life contract participants, with relevant failures treated as individual contracts at the time cover is provided (s 32). It affects insurance intermediaries, with non-binder brokers acting as agents of the insured for notices and documents, and other intermediaries deemed agents of the insurer (s 71). It affects ASIC, which has powers to require documents and particulars from insurers, intervene in proceedings, and exercise enforcement functions (ss 11C, 11D, 11F, Part IXA). It affects directors, employees and agents of insurers, who commit offences if they permit or authorise insurer conduct constituting specified offences (s 11DA). It affects claimants under liability insurance, who may require insurer admission and conduct confirmation (s 41). It affects purchasers of buildings or contents, who are deemed insured for the period after risk passes until completion, possession, replacement cover or termination (s 50). It affects deceased or missing insureds or third party beneficiaries, allowing direct recovery from the insurer with discharge (s 51). The Act does not apply to State or Northern Territory insurance (s 9(2)) and specific sections do not apply to war-risk aircraft hull or prescribed war or terrorism provisions (s 9(3) and (4)).

Each party must act with utmost good faith in respect of matters arising under or in relation to the contract, with breach of the implied provision constituting a breach of the Act and insurer contravention attracting a civil penalty of 5,000 penalty units (s 13). A party may not rely on a contractual provision if reliance would fail to act with utmost good faith, and the court must have regard to any notification of the provision given to the insured (s 14). An insurer must clearly inform the insured in writing before entry of the general nature and effect of the duty of disclosure, the effect of section 27AA(2) for life insurance, and that the duty continues until entry, with additional written notice to life insureds and reminder notices for delayed acceptance or counter-offer (s 22). For consumer contracts the insured must take reasonable care not to make a misrepresentation before entry (s 20B). For other contracts the insured must disclose every known relevant matter (s 21). An insurer may not refuse a claim for a prescribed event under a prescribed contract for less than the minimum amount or no cover unless it clearly informed the insured in writing or the insured knew or a reasonable person would know the true position (s 35). An insurer may not rely on an unusual term unless it clearly informed the insured in writing of its effect before entry (s 37). For prescribed contracts an insurer must clearly inform the insured in writing before entry whether the contract covers flood as defined by regulation (s 37C). For liability insurance an insurer must clearly inform the insured in writing before entry of the effect of late notice provisions and any lack of prior-events cover (s 40). An insurer may not refuse a claim under an instalment contract of general insurance for non-payment unless at least one instalment has been unpaid for 14 days and the insured was clearly informed in writing of the effect before entry (s 39). Provisions making interim contract liability dependent on proposal submission or acceptance are void, and the insurer remains liable until replacement cover commences, cancellation or withdrawal (s 38). An insurer may not rely on an average provision unless it clearly informed the insured in writing of its nature and effect before entry, with no reduction for residence or contents contracts where the sum insured is at least 80 per cent of the value on an indemnity or replacement basis (s 44). Other insurance limiting or excluding provisions are void except for specified contracts (s 45). Pre-existing defect or sickness or disability provisions may not be relied on if the insured or a reasonable person would not have been aware at entry (ss 46 and 47). Third party beneficiaries have rights to recover under the contract (ss 48 and 48A). An insurer liable for interest must pay interest from the day it became unreasonable to withhold payment until the earlier of payment or posting, at the prescribed rate, excluding other laws (s 57). An insurer must give written notice of expiry of renewable cover not later than 14 days before expiry, stating the expiry day and time and whether prepared to negotiate renewal or extension (s 58(2)). An insurer wishing to cancel must give written notice, with cancellation effective at the earlier of replacement contract or latest of specified times (s 59(2)). An insurer must provide a Key Facts Sheet in prescribed circumstances and manner for prescribed contracts (s 33C). On written request an insurer must give a written statement of all contract provisions (s 74) and reasons for not accepting an offer, cancelling, not renewing or offering less advantageous terms due to special risk (s 75).

Breach of the implied utmost good faith provision by an insurer is a civil penalty provision with a penalty of 5,000 penalty units (s 13). Failure to provide a Key Facts Sheet in prescribed circumstances attracts a civil penalty of 5,000 penalty units and an offence of 150 penalty units (s 33C). Failure to comply with ASIC requirements for documents or particulars without reasonable excuse is an offence of 150 penalty units, strict liability, with exceptions for particular person documents without authorisation or self-incrimination (ss 11C and 11D). Intentional or reckless false or misleading particulars or statistics is an offence of 150 penalty units (s 11D(2)). Directors, employees or agents commit an offence of 150 penalty units if they permit or authorise insurer conduct constituting specified offences (s 11DA). Failure to clearly inform in writing for liability insurance late notice provisions attracts a penalty of 300 penalty units (s 40). Failure to respond to a claimant request for admission and conduct confirmation under liability insurance bars refusal or reduction (s 41). Failure to give expiry notice creates a deemed replacement contract with premium payable only on claim (s 58(3) to (6)). Purported cancellation in contravention of the Act is of no effect (s 63). ASIC may apply to a relevant court for a declaration of contravention of a civil penalty provision within 6 years, and the court must make the declaration if satisfied, with the declaration conclusive evidence (s 75A). After declaration ASIC may seek a pecuniary penalty order, with the court considering the nature and extent of the contravention, loss or damage, circumstances and prior similar conduct (s 75B). For individuals the pecuniary penalty is the greater of the specified penalty or three times the benefit derived and detriment avoided (s 75D(1)). For bodies corporate it is the greatest of ten times the specified penalty, three times benefit derived and detriment avoided, or 10 per cent of annual turnover or 2.5 million penalty units if greater (s 75D(2)). ASIC may give an infringement notice within 12 months if it reasonably believes a person has contravened a prescribed offence or civil penalty provision, with the notice containing specified details including a unique number, date, recipient name, brief contravention particulars, payable amount (half the maximum court penalty for offences or 12 penalty units for individuals or 60 for bodies corporate for civil penalties), 28-day payment period, and rights to extension, instalments or withdrawal (s 75W and s 75Y). Payment before the end of the period discharges liability, prevents prosecution or pecuniary penalty proceedings as applicable, and is not an admission of guilt or liability (s 75ZD). ASIC may withdraw the notice on representations or its own initiative, considering representations and factors including prior court penalties, circumstances, prior payments and other matters (s 75ZC). The Division does not require ASIC to issue a notice, does not affect liability where a notice is not complied with or not given or is withdrawn, does not prevent multiple notices, and does not limit court discretion on penalty (s 75ZE). A pecuniary penalty is a debt to the Commonwealth enforceable as a judgment debt (s 75E). Civil proceedings are stayed if criminal proceedings commence on substantially the same conduct and resume only if no conviction (s 75M). Evidence given by an individual in civil proceedings is inadmissible in subsequent criminal proceedings on substantially the same conduct except regarding falsity (s 75P). Attempt or involvement is treated as a contravention (s 75Q). Failure to perform a required act within a period constitutes a separate contravention each day (s 75R). Mistake of fact is a defence where the person considered the facts and held a reasonable mistaken belief that would have rendered the conduct non-contravening, with evidential burden on the person (s 75T). A person relying on an exception, exemption, excuse, qualification or justification bears an evidential burden (s 75U). Conduct by an employee, agent or officer within scope or authority is attributed to the body corporate (s 75V).

The Parliament intends that the Act does not affect the operation of any other Commonwealth law, State or Territory law, or any principle or rule of the common law including the law merchant or equity, except where the Act expressly or by necessary intendment otherwise provides (s 7). The Act operates in addition to the unfair contract terms provisions of the Australian Securities and Investments Commission Act 2001 (s 12). Contracts of insurance are not subject to relief under other Acts for being harsh, oppressive, unconscionable, unjust, unfair or inequitable or for misrepresentation consequences, but compensatory damages and remedies for unfair contract terms under the Australian Securities and Investments Commission Act 2001 section 12BF remain available (s 15). ASIC may exercise powers under the Corporations Act 2001 Part 7.6 as if an insurer's failure to comply with utmost good faith in claim handling or settlement were a failure to comply with a financial services law (s 14A). The remedies in Division 3 of Part IV are exclusive of other rights for pre-entry non-disclosure or misrepresentation (s 33). The remedies in Division 3 of Part V are exclusive of other rights for post-entry acts or omissions (s 55). Section 57 applies to the exclusion of any other law for interest on claims (s 57(4) and (5)). An insurer may cancel a life insurance contract only as provided by the Act or Life Insurance Act 1995 section 210 (s 63). The Marine Insurance Act 1909 does not apply to pleasure craft contracts unless connected with cargo capacity (s 9A(1)). Written notice or information may be given in ways that comply with the Electronic Transactions Act 1999 and regulations (note to s 72A). Where two or more insurers are liable under separate general insurance contracts for the same loss to the same insured, the insured may recover the full indemnity from any one or more, subject to not exceeding the sum insured or total loss, with recovered insurers retaining contribution rights (s 76). The related retrieval context includes section 41H of the Civil Aviation (Carriers' Liability) Act 1959, which provides that if the proper law of a contract of insurance would be the law of any part of Australia except for a term that it should be the law of a foreign country, or if the contract contains a term substituting foreign law for provisions of that Part, then that Part applies despite the term. This connects to the Insurance Contracts Act 1984 section 8 application rules by ensuring Australian law provisions prevail in specified aviation insurance contexts despite foreign law terms.

The provided source text does not specify dates or reasons for recent changes to the Act. The Act as set out includes the definition of consumer insurance contract in section 11AB, the duty to take reasonable care not to make a misrepresentation in Division 1A of Part IV, flood cover requirements in Division 1A of Part V including the regulatory definition of flood and pre-entry information obligations, Key Facts Sheet requirements in Division 4 of Part IV, and the enforcement regime in Part IXA including infringement notices, civil penalty declarations, pecuniary penalty orders and interaction between civil and criminal proceedings. The text also includes provisions for ASIC administration in Part IA, treatment of interim contracts in section 38, and subrogation rules in Part VIII including limits on subrogation against family members or employees in specified circumstances.

In Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2022] HCA 38 the High Court considered sections 13, 14 and 28(3) of the Act in the context of an insurer's conduct in handling and settling a claim, including the duty of utmost good faith and remedies for relevant failures. The provided source text does not detail other court challenges or controversies. The Act provides that a court may disregard avoidance of a contract on a fraudulent relevant failure if it would be harsh and unfair, provided prejudice to the insurer is minimal or insignificant, weighing deterrence of fraud against insured culpability and loss (s 31). A court may disregard cancellation of a life insurance contract on a fraudulent claim if harsh and unfair, ordering just and equitable payment or reinstatement, considering the need to deter fraudulent conduct and other relevant matters (s 59A). A court may order just and equitable payment on a fraudulent claim under section 56 if the fraud is minimal and refusal would be harsh and unfair, considering deterrence and other matters.

Insurers must provide clear written information before entry for many protections to apply, including the nature and effect of the duty of disclosure (s 22), reduced or no cover for prescribed events (s 35), unusual terms (s 37), flood cover (s 37C), late notice effects in liability insurance (s 40), average provisions (s 44), and pre-existing limiting agreements (s 68). Failure to give expiry notice for renewable cover creates a deemed replacement contract with premium calculated by formula only on claim (s 58(3) to (6)). Provisions making interim contract liability dependent on proposal submission or acceptance are void, but the insurer remains liable until replacement cover, cancellation or withdrawal (s 38). For instalment contracts of general insurance, refusal for non-payment requires at least 14 days unpaid and pre-entry written information, and cancellation provisions may be inconsistent with section 59 only if at least one instalment unpaid for one month and pre-entry written information given (ss 39 and 62). The remedies for non-disclosure and misrepresentation in Division 3 of Part IV are exclusive (s 33), and remedies for post-entry acts or omissions in Division 3 of Part V are exclusive (s 55). Provision of a Key Facts Sheet does not constitute clearly informing the insured of its contents (s 33D). Unanswered or obviously incomplete or irrelevant proposal answers deem waiver of disclosure duty (s 21(3)) and are not misrepresentations (s 27). Ambiguous questions take the meaning a reasonable person would have understood the answerer to have attributed (s 23). An insurer may not rely on a pre-existing defect provision if the insured or reasonable person would not have been aware at entry (s 46). Subrogation rights are limited against family or personal relationship third parties or consented road motor vehicle use, and against employees for conduct in employment without serious or wilful misconduct (ss 65 and 66). An insurer may not impose assignment conditions or invite assignment before or on payment under section 65, with any such assignment void (s 65(5) and (6)). For multiple insurers liable for the same loss, full recovery from one does not prejudice contribution rights (s 76). ASIC document receipt does not imply compliance or endorsement (s 11E). Prior compliance with information requirements is deemed for subsequent renewals, extensions or reinstatements subject to limits on variations (s 11(10)).

Insurers should review all pre-contract information obligations and ensure clear written disclosure of the duty of disclosure nature and effect, life insurance section 27AA(2) effect, and ongoing duty, with life insured notification and reminder notices where acceptance is delayed more than two months (s 22). For prescribed contracts and events, provide clear written information on reduced or no cover or obtain insured knowledge or reasonable person knowledge to rely on reduced cover (s 35). Identify and provide clear written information on the effect of any unusual terms before entry (s 37). For prescribed contracts, provide clear written information on flood cover as defined by regulation (s 37C). For liability insurance, provide clear written information on late notice effects and lack of prior-events cover (s 40). For instalment contracts, provide clear written information on non-payment refusal effects (s 39). For average provisions, provide clear written information on nature and effect, and apply no reduction where residence or contents sum insured is at least 80 per cent (s 44). Implement processes to provide Key Facts Sheets in prescribed circumstances and manner for prescribed contracts, noting that provision does not constitute clearly informing (s 33C and s 33D). Maintain systems to respond to ASIC requests for documents on insurance cover within 30 days or longer period, and for organisational particulars, statistics or training materials, with exceptions for self-incrimination or identity-revealing information (ss 11C and 11D). Ensure claim handling and settlement complies with utmost good faith to avoid ASIC exercise of Corporations Act powers (s 14A). For cancellation, follow the notice requirements and effective times in section 59, and note restrictions on life insurance cancellation to fraudulent claims or Life Insurance Act 1995 section 210 (ss 59, 59A and 63). For renewable cover, issue expiry notices not later than 14 days before expiry (s 58(2)). On request, provide written statements of contract provisions (s 74) and reasons for adverse decisions due to special risk, with medical practitioner nomination options for health-related reasons (s 75). For subrogation, avoid imposing assignment conditions and allocate recoveries according to the rules in section 67, subject to contract terms and post-loss agreements. For enforcement, respond to infringement notices within the payment period or seek extension, instalment arrangements or withdrawal, noting that timely payment discharges liability without admission (ss 75Z, 75ZA, 75ZB, 75ZC and 75ZD). Insureds should take reasonable care not to make misrepresentations before entry in consumer contracts, considering all relevant circumstances including question clarity and insurer material (s 20B), and disclose known relevant matters in other contracts (s 21). Third party beneficiaries should note their rights to recover per contract terms and obligations (ss 48 and 48A). Compliance professionals should audit contracts for compliance with standard cover minimum amounts, flood definitions, and void provisions such as arbitration clauses (s 43) and other insurance limits (s 45). Organisations should train staff on utmost good faith obligations in claims and ensure no reliance on provisions where reliance would fail utmost good faith (s 14).