The Insurance Contracts Act 1984 (Cth) writes into every insurance contract a statutory obligation on both parties to act with the utmost good faith [s 13].
Responsibilities of the insurer
The duty of utmost good faith requires an insurance company to:
- assess claims promptly
- not delay paying claims without proper cause
- not refuse to pay claims without proper cause (for example, by inappropriately preferring a GP’s medical opinion over that of a specialist)
- in some circumstances, specifically advise the consumer of what risks the policy covers.
Responsibilities of the insured
The duty of utmost good faith requires an insured person to:
- disclose all information relevant to the insurer’s decision to accept the risk (the duty of disclosure — see below)
- not make false or exaggerated claims
- cooperate with the insurer when making claims.
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