The Law Handbook 2024

Chapter 10.4: Insurance 953 judge Kenneth Hayne and became known as the ‘Hayne Royal Commission’. In 2019, the Hayne Royal Commission recommended sweeping changes to the insurance industry, including increasing consumer protection and making insurance companies more accountable for their conduct. The subsequent reforms to the IC Act, the Corporations Act 2001 (Cth), and the Australian Securities and Investments Commission Act 2001 (Cth) (‘ ASIC Act ’) are covered in this chapter. Insurance contracts Do your research Selecting an insurer and an insurance policy is an important decision. Most insurers publish their policies online. Download a policy and read it to make sure that it is suitable for your needs. In particular, check the exclusions in the policy and ensure none of them apply to your situation. Application for insurance Normally, an insurer will require a consumer to complete a proposal form or application before offering insurance to the consumer. These forms/ applications are completed over the phone or online. Insurers use these forms/applications to collect information from the consumer. Consumers should answer the insurer’s questions accurately and honestly. If a consumer accepts the policy and terms offered by the insurer, the consumer will then be asked for their bank or credit card details. The policy will come into effect at that time or on an agreed future date. Cooling-off period A cooling-off period is the time allowed for a purchaser to change their mind and legally withdraw from a contract after signing it. All policies have a cooling-off period that commences on the date that the policy was issued to the consumer or the start date agreed with the consumer. Insurance schedule An insurer will then give the insurance policyholder an insurance or policy schedule. The insurance schedule contains important information about the insurance contract, such as the details of the insured person or parties, the period of insurance, the amount of cover, the type or class of risk insured, the premium (i.e. the price of the insurance policy), the excess, any additional risks covered by the insurance policy, and special conditions applying to that policyholder and/ or to that policy, and any specific risks excluded by the policy. Often accompanying the insurance schedule is a record of the information/answers supplied by the policyholder at the time the policy was purchased. It is important that policyholders carefully read this information and ensure it is accurate. Product disclosure statement Insurers should give the policyholder a copy of the ‘policy wording’ or ‘product disclosure statement’. Usually, this is a document or booklet containing the terms and conditions of the insurance policy. This statement also contains more specific information about what is covered and not covered by the particular insurance contract. The product disclosure statement also outlines how policyholders can make a claim under the contract and their rights and responsibilities in respect of claims. Certificate of currency Insurers should also give the policyholder a certificate of currency. This is a short summary of the insurance cover that the policyholder can provide to their financier (e.g. their bank) or landlord. Insurance premium The insurance premium is the price paid by the policyholder for the insurance policy. The premium may be payable in a lump sum or by instalments. Typically, the insurance contract will state that an insurer is not liable to cover any loss until the premium is paid. Depending on the wording in the product disclosure statement, failure to pay a premium may entitle an insurer to cancel the insurance policy. Excess The excess (sometimes referred to as the ‘deductible’) is the contribution a policyholder is required to make towards the settlement or payment of any claim made under the insurance contract.