The duty of utmost good faith

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.
The duty of utmost good faith  :  Last Revised: Thu Jul 17th 2014
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