Notify us “if anything changes about your home or contents"
On 4 April 2023, ASIC filled their first test case in the Federal Court of Australia pursuant to recent amendments to s 12BF of the Australian Securities and Investments Commission Act 2001. These amendments expand unfair contract term protections to insurance contracts with consumers and small businesses.
ASIC are alleging that a term in a standard form insurance contract requiring consumers to notify Auto & General Insurance Company Limited “if anything changes about your home or contents” is unfair. The contract went on to say that if consumers did not notify the company of such changes, the company might “refuse to pay a claim, reduce the amount we pay, cancel your contract, or not offer to renew your contract”.
While not a climate case, this case may have implications for future climate litigation if it is successful. The case could, for example, be used to argue that consumers ought to be protected against blanket terms in insurance contracts that could require consumers to take unreasonable steps to safeguard their homes against climate impacts or to be aware of all the damages that may result from climate change.
Section 12BG of the ASIC Act provides that a contract term is ‘unfair’ if: “(a) it would cause a significant imbalance in the parties' rights and obligations arising under the contract; and (b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and (c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on”.
ASIC are alleging that the term is unfair, inter-alia, because it imposes an onerous obligation of consumers to notify the company of “anything”, it is not necessary for the company to be notified of “anything” to protect its interests, and it could cause detriment to the consumer.
For more details, see ASIC's press release here: https://asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-088mr-asic-sues-auto-general-insurance-company-for-alleged-unfair-contract-terms-in-insurance/