What is the duty to take reasonable care not to make a misrepresentation?

Since 5 October 2021, consumer life insurance applicants must take reasonable care not to make a misrepresentation to the insurer when answering application questions (Insurance Contracts Act 1984, s20B). This duty replaced the older 'duty of disclosure' under s21 for consumer contracts.

The change was introduced by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020. The reform shifted the obligation from a proactive 'disclose anything relevant' standard to a reactive 'answer the insurer's questions honestly and accurately' standard. All 9 panel PDSs (AIA, Zurich, TAL, OnePath, ClearView, NEOS, Encompass, Acenda, Futura) reflect s20B wording.

What the duty requires

When completing an application or any related health, financial, or lifestyle questionnaire, you must:

• Answer every question asked, truthfully and completely
• Avoid answers that are false, partially true, or misleading
• Avoid omitting information that would make the answer accurate
• Tell the insurer about any change in answers before the policy is issued

The standard is what a reasonable person in your circumstances would have known at the time of answering. The insurer must phrase questions clearly; ambiguous or compound questions may shift the burden back to the insurer if a dispute arises.

What the duty does not require

Under the old s21 duty of disclosure, applicants had to proactively volunteer anything they knew that was relevant to the insurer's decision. Under s20B, applicants no longer have that proactive duty; the obligation is to answer the questions the insurer asks. The insurer carries the burden of designing complete and clear questions.

Where each panel insurer documents the duty

All 9 panel PDSs frame the duty in substantially identical language consistent with ICA s20B.

• AIA Priority Protection PDS (Version 32, 9 November 2025), Section 10.2: Your duty to take reasonable care not to make a misrepresentation to the insurer... A misrepresentation is a false answer, an answer that is only partially true, or an answer that is misleading.
• Zurich Wealth Protection PDS (1 November 2025): The duty to take reasonable care not to make a misrepresentation.
• TAL Accelerated Protection PDS (12 December 2024), Section 5: Duty to take reasonable care not to make a misrepresentation.
• OnePath OneCare PDS (1 October 2025): It is important that you understand your duty to take reasonable care not to make a misrepresentation before you complete the Application Form.
• ClearView ClearChoice PDS (13 May 2024, update effective 5 June 2025): Your duty to take reasonable care not to make a misrepresentation.
• NEOS Protection PDS (6 December 2024): Your duty to take reasonable care... will take reasonable care not to make a misrepresentation.
• Encompass Protection PDS (26 September 2025): Your duty to take reasonable care... reasonable care not to make a misrepresentation to the insurer.
• Acenda Insurance PDS (27 September 2025), pages 118-119: Your duty to take reasonable care not to make a misrepresentation.
• Futura Protection PDS (1 October 2025): Your duty to take reasonable care... This duty to take reasonable care also applies when changes are made to reflect the truth.

Insurer remedies if the duty is breached

Under Insurance Contracts Act ss28-29, the insurer's remedies depend on whether the breach was fraudulent and what the insurer would have done if the truth had been disclosed:

• Non-fraudulent misrepresentation (s28A-D): the insurer must apply a proportionate remedy. Options are to treat the policy as if it had never been entered into (only if the insurer would not have entered into the contract had it known the true facts), reduce the sum insured proportionately, or impose an exclusion reflecting the prior position. The remedy must reflect what the insurer would have done at the time the contract was made, not what is most advantageous at claim time.
• Fraudulent misrepresentation (s28(2)): the insurer can avoid the policy entirely. The insurer carries the burden of proving fraud.
• 3-year limit (s29(3)): for non-fraudulent non-disclosure on life policies, the insurer's right to avoid the policy is restricted after 3 years from the date the policy was entered into.
• Discriminatory or impermissible questions: the insurer cannot rely on a breach where the misrepresentation was made in response to a question the insurer was not entitled to ask (for example, certain discriminatory questions under anti-discrimination legislation).

AFCA reviews insurer decisions to apply s28 remedies in a complaint setting and routinely scrutinises whether the insurer has correctly applied the proportionality test.

Practical points for applicants

• Read each question carefully before answering. Compound or technical questions are common.
• If a question is unclear, ask the insurer or your broker to clarify before answering. The standard is reasonable care, not perfection.
• Disclose all medical history requested, including conditions you consider minor, if the question asks for it.
• Keep copies of all answers and forms submitted, ideally with a date stamp.
• If you discover an error after the application is submitted but before the policy is issued, notify the insurer immediately so the answer can be corrected.
• Honest answers, even about difficult medical or lifestyle topics, are the single best protection against claim disputes years later.

Pre-2021 contracts

Life insurance policies in force before 5 October 2021 continue to operate under the s21 duty of disclosure framework that applied at the time the contract was made. The s20B duty applies only to consumer insurance contracts entered into from 5 October 2021. Increases or changes to a pre-2021 contract may bring the new s20B duty into play for the change itself.

Regulator anchor

• Insurance Contracts Act 1984 (Cth), s20B (duty), ss28-29 (remedies), s29(3) (3-year limit), s54 (relief for minor prejudice)
• Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (commenced 5 October 2021 for the s20B reforms)
• Life Insurance Code of Practice 2019
• ASIC RG 274 (sales practices)
• AFCA reviews insurer s28 decisions on complaint