Is my insurance contract unfair?


From April 5, 2021, the “abusive contracts” provisions of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC law) have been applied to Insurance Contracts Act 1984 (Cth) (I CA). This means that insurance contracts, such as auto insurance, life insurance, and home and contents insurance will be subject to unfair contract terms.

What are the terms of an “unfair contract”?

Section 12BF of the ASIC Act states that a “consumer contract” or “small business contract” is void if:

  1. the term is unfair;
  2. a contract is a standard contract; and
  3. the contract is:
    1. a contract for the supply, or possible supply, of services which are financial services.

What is unfair?

Article 12BG of the ASIC law states that a term is abusive if it:

  1. results in a significant imbalance in the rights and obligations of the party under the contract;
  2. it is not reasonably necessary to protect the legitimate interests of the party who would benefit by the term; and
  3. would deter a party if it were to be applied or invoked.

What is a consumer contract?

A consumer contract is a contract in which at least one of the parties to the agreement is a natural person whose acquisition of what is provided under the contract is wholly or primarily an acquisition for personal, household use or consumption. or domestic.

What is a small business?

A small business contract is where:

  1. at the time of conclusion of the contract, at least one of the parties in contact is a company which employs less than 20 people; and
  2. one of the following conditions applies:
    1. the initial price payable under the contract does not exceed $ 300,000; Where
    2. the contract has a term of more than 12 months and the initial price payable under the contract does not exceed $ 1,000,000.

Please note that casual employees are not counted for the purpose of determining the number of people employed by a small business, unless they are employed on a regular and systematic basis.

Excluded contracts

Unfair contract terms do not apply to all insurance policies, such as health insurance, mandatory third party plans and workers’ compensation.


If a clause in your insurance contract is found to be unfair, a court can declare it void or strike out the provision it deems unfair, the remaining clauses of the contract continuing to apply between the parties.

If you think a clause in your insurance contract is abusive, you can:

  1. file a complaint with your insurance company as part of its dispute resolution process;
  2. file a complaint with the Australian Financial Complaints Authority; Where
  3. take the matter to court and seek a declaration that the clause in the insurance contract is abusive.


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