Insurance Law Week 1-3 Review

A collection of vocabulary terms based on the first three weeks of Insurance Law, covering legislation, key concepts, duties, and rules of construction.

Insurance Contracts Act 1984 (Cth) (ICA)

The primary Australian legislation that governs insurance contracts, designed to reform the common law and strike a fair balance between the interests of insurers and insureds.

Marine Insurance Act 1909 (Cth) (MIA)

Legislation that codified the common law of marine insurance and applies to marine insurance contracts, excluding pleasure craft owned by consumers.

Duty of Utmost Good Faith (uberrimae fidei)

A core principle at common law and under Section 13 of the ICA requiring both parties to act toward each other with honesty and fairness throughout the life of the contract.

Broker

An insurance intermediary who acts for the insured by helping them find and arrange suitable insurance.

Agent

A person who acts for the insurer by selling or arranging insurance on the insurer's behalf.

Underwriter (Insurer)

A person or entity that assesses the risk and decides whether to offer insurance and on what terms.

Loss Adjuster / Surveyor / Assessor

An individual who investigates a claim to check if it is genuine and assesses the amount of the loss.

Indemnity

The principle of compensating the insured for the actual loss suffered to restore them to the position they were in before the loss occurred.

Section 11AB ICA

Defines a consumer insurance contract as insurance obtained wholly or predominantly for personal, domestic, or household purposes.

Section 13 ICA

Implies a provision in every insurance contract requiring each party to act with the utmost good faith; a breach by an insurer carries a civil penalty of $5,000$ penalty units.

Section 20B ICA

The statutory duty for consumers to take reasonable care not to make a misrepresentation to the insurer before the contract is entered into.

Section 21 ICA

The statutory duty of disclosure for business (non-consumer) insurance, requiring the insured to disclose matters they know, or a reasonable person would know, are relevant to the insurer.

Section 24 MIA

The statutory duty for marine insurance requiring the assured to disclose every material circumstance that would influence a prudent insurer.

Material Circumstance

In marine insurance (MIA), a circumstance that would influence the judgment of a prudent insurer in fixing the premium or deciding whether to accept the risk.

Rescission (Avoidance)

A common law remedy where an insurance contract is treated as if it never existed (ab initio), requiring the return of premiums and repayment of claims.

Section 28 ICA

Outlines remedies for 'relevant failures' (non-disclosure or misrepresentation) in non-consumer contracts, allowing for claim reduction or avoidance in cases of fraud.

Section 31 ICA

Grants the court limited discretion to disregard an insurer's avoidance of a contract for fraudulent non-disclosure if it would be harsh and unfair and there is minimal prejudice to the insurer.

Insuring Clause

The part of an insurance policy that defines the basic scope of cover and the risks the insurer promises to indemnify.

Exclusion Clause

A policy term that identifies specific risks or circumstances that the insurer does not cover, even if they fall within the insuring clause.

Excess / Deductible

The specific amount of a loss that the insured must bear themselves before the insurer pays a claim.

Ejusdem Generis

A rule of construction where general words following a list of specific words are limited to things of the 'same sort, kind or nature' as the specific items.

Contra Proferentem

A rule of last resort where genuine ambiguity in a policy term is construed against the party who drafted it (usually the insurer).

Attach

The point at which insurance cover begins and the insurer becomes 'on risk' for covered events.

Hayne Royal Commission (2019)

A commission whose recommendations led to major reforms in 2020, including the unfair contract terms regime and the new duty to take reasonable care not to misrepresent.