Test a refusal of an NSW income-protection or life policy against section 54
MaintainedLast reviewed
Key facts
- Human involvement
- RedLawyer-led
- How AI is used
- From the policy, the refusal and the act or omission the insurer relies on, set out whether that act was after the contract and which subsection of section 54 the file raises. Do not apply section 54 to a contract the lawyer marks under section 9, and do not say whether the insurer may refuse.
- What the lawyer must review
- Decide whether the refusal rests on an act or omission after the contract.
- Apply the prejudice reduction, the causation refusal, and the safety exception only as section 54 states them.
- Do not use section 54 on a workers compensation or motor-accident contract marked under section 9.
- Keep medical details in the firm's system. Apply ASCR rule 9, APP 11, and the Privacy Act notifiable-breach test.
Rules that apply
The document starts from the task name. Change it if this piece of work is different.
The work product
Forum. Insurance Contracts Act 1984 (Cth) sections 9 and 54, for a life or income-protection policy outside a New South Wales statutory scheme
Produce. A section 54 element table. No conclusion on the refusal.
Have ready. Policy and the refusal; The act or omission the insurer relies on; Dates of the contract and of the act; The lawyer's mark on whether section 9 applies.
Example of the limit. Illustrative example: An income-protection insurer refuses a claim because a form was late. The tool sets out section 54(1) and (2) and leaves causation and prejudice blank. It does not do this exercise for a workers compensation policy the lawyer has marked under section 9.
Stop and hand it back when
- The lawyer has not said whether section 9 takes the contract outside the Act.
- The date of the act relative to the contract is not on the file.
Sources for this task were checked on 2026-10-23.
Who does what
| Role | What they do |
|---|---|
| Assistance | Do not begin AI assistance until the responsible lawyer has defined and confirmed its permitted scope. |
| Lawyer | Perform the substantive analysis and decisions. Independently check any permitted supporting work and approve the exact output for its intended use. |
Checklist
- Section 54(1) concerns an act after the contract, other than an act to which subsection (2) applies. The insurer may not refuse by reason only of that act, but liability is reduced by the prejudice to the insurer.
- Subsection (2) allows a refusal where the act could reasonably be regarded as capable of causing or contributing to a loss. Subsections (3) and (4) limit that refusal if the insured proves the loss, or part of it, was not caused by the act.
- Subsection (5) prevents a refusal by reason only of an act necessary to protect a person or property, or an act that it was not reasonably possible to avoid. Subsection (6) includes an omission.
- If the lawyer marks the contract under section 9(1)(e) or (f), or as State insurance under section 9(2), do not apply section 54.
Sources
- Insurance Contracts Act 1984 (Cth) section 54 · 2026-10-23
- Insurance Contracts Act 1984 (Cth) section 9 · 2026-10-23
This version is for a life, total and permanent disablement or income-protection contract that is not a New South Wales workers compensation or motor-accident scheme contract. No remedy figure was opened.