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ASIC appeals against unfair contract term ruling 

The Australian Securities and Investments Commission is challenging a court ruling that a notification clause in Auto & General home and contents policies did not breach unfair contract terms laws. 

It has filed a notice of appeal after the Federal Court last month dismissed its proceedings against the insurer concerning policies sold between April 5 2021 and last year.

Justice Ian Jackman ruled the clause requiring policyholders to inform Auto & General “if anything changes about your home or contents” is not an unfair contract term.

The corporate regulator says it remains concerned that the term imposes an unclear obligation on policyholders regarding what they must disclose, and that the term could mislead or confuse the customer as to their obligations and rights.

It says the term suggests the insurer has a broader right to refuse claims or reduce payouts if the policyholder does not meet the notification obligation than is in fact available under the Insurance Contracts Act.

In its notice of appeal, the regulator says the judge erred in finding the notification term is “reasonably necessary” to protect the insurer’s legitimate interest.

Justice Jackman said in his ruling that legitimate interests include the insurer's ability to choose which risks it will insure, and that the information gathering process ensures it is not covering risks it is unwilling to insure.

The notice of appeal also says the judge erred in not finding the notification term would cause a significant imbalance in the rights and obligations of the parties involved.

The appeal will be heard by the Full Federal Court on a date yet to be determined.

An Auto & General spokesperson says the insurer notes the decision to appeal against the ruling.

Click here for the notice of appeal.