27AAMeaning of relevant failure

27AA Meaning of relevant failure

(1) In this Act, a relevant failure in relation to a contract of insurance is: (a) if the contract is, or would be, a consumer insurance contract—a misrepresentation made by the insured in breach of the duty to take reasonable care not to make a misrepresentation; or (b) otherwise: (i) a failure by the insured to comply with the duty of disclosure; or (ii) a misrepresentation made by the insured to the insurer before the contract was entered into. (2) Without limiting subsection (1), if, in relation to a contract of life insurance under which a person other than the insured would become a life insured: (a) the life insured made a misrepresentation during the negotiations for the contract but before it was entered into; and (b) the misrepresentation would have been a breach of the duty to take reasonable care not to make a misrepresentation if that duty had applied to the life insured in relation to the contract; then the misrepresentation is a relevant failure in relation to the contract (whether or not the contract is a consumer insurance contract).