This duty, introduced in 2021, requires consumers to take reasonable care not to make misrepresentations to insurers when applying for insurance or making claims, replacing the previous duty of disclosure.
The duty to take reasonable care not to make a misrepresentation took effect on 5 October 2021 under reforms to the Insurance Contracts Act 1984. It fundamentally changed what consumers must do when applying for insurance.
The shift makes the insurer responsible for asking the right questions, rather than expecting consumers to guess what is relevant.
It depends on the circumstances, including:
If a consumer breaches the duty, the insurer's remedies depend on the type of misrepresentation:
This reform reduces claim disputes arising from inadvertent non-disclosure.
A consumer forgot to mention a previous minor car accident when asked about their driving history; the insurer found this was not taking reasonable care and reduced the claim payment proportionately
An insurer asked 'Do you have any medical conditions?' without specifying what they considered relevant; when a claim was denied for non-disclosure, AFCA found the question was too broad and the consumer had taken reasonable care
A policyholder intentionally omitted information about pre-existing heart disease when asked directly; this fraudulent misrepresentation allowed the insurer to void the life insurance policy entirely
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